Tariff Man boosts the buck, slams stocks Tariff Man boosts the buck, slams stocks Tariff Man boosts the buck, slams stocks

Tariff Man boosts the buck, slams stocks

John Hardy

Head of FX Strategy

Summary:  Trump’s loud support of tariffs broke the back of the G20-inspired rally. The gutting of risk sentiment boosted the greenback across the board, with the Japanese yen safe-haven bid firing inconsistently. AUD was the weakest of G10 currencies overnight on a GDP miss.

US President Trump declared himself a “Tariff Man”, touting the efficacy of tariffs yesterday. In reply, the markets voted with a loud thumbs down, scotching the entire post-G20 rally and then some on weakening confidence that this loose cannon of a president can cobble together a coherent or stable trade deal with China. For its part, China took exception to some of the uncertainty on whether anything at all was agreed at the G20 by trying to reassure that it will push on with trade negotiations. Interesting that this reassurance provided very little support overnight.

In the wake of yesterday’s developments, we are left with a much stronger US dollar, decimated risk appetite and lower US yields all along the curve, with a powerful yield curve flattening garnering increase attention as long US yields drop and look to have posted a major reversal. The Japanese yen did play a safe haven role yesterday, cutting a swath of strength across the G10 yesterday before fading a bit overnight. 

Today, US markets are closed to honor former President George H. W. Bush’s passing. 

A pivotal day for the UK yesterday. Early in the session, sterling rallied steeply from close to recent lows after an EU court advisory body indicated that the UK could pull out of Brexit unilaterally, effectively meaning that the UK-EU relationship could revert to pre-referendum status quo. But later, the sterling rally reversed as Prime Minister May was found in contempt by parliament for withholding information, and in another vote, parliament established that it will now have more control over the Brexit endgame if May’s deal heads toward what looks an inevitable rejection next Tuesday. 

We have a Bank of Canada meeting on tap, but expectations are minimal for a rate move this time around and there is no press conference at this meeting. The choppy USDCAD has reversed course once again and is looking back toward the range highs just south of 1.3400.


Cable has been teetering on the brink here after May’s no-good, very bad day yesterday, a day in which parliament found May in contempt and will have far more leeway than previously in controlling the Brexit endgame. A close below the prior low potentially opens up the range to 1.2000, although GBP will remain vulnerable to headlines of either stripe at all times, as yesterday made rather clear, and traders are likely reluctant to commit to trades outside of the options market, fearing the choppy conditions from day to day.

Source: Saxo Bank

The G10 rundown

USD – the greenback rallying only as a function of safe haven seeking – for a return of weakness, risk sentiment needs to improve again.

EUR – the EU and euro at risk from the Brexit endgame as well and even more so the next recession as German bund yields are scraping new lows below 25 basis points this morning.

JPY – yesterday’s steep rally yielding to a partial retreat today, showing a rather inconsistent firing of what used to be a reliable safe haven bid for the yen. Is the JPY changing its stripes somewhat? Too early to tell…

GBP – the endgame is approaching for Brexit and the outlook is as hazy as ever. May’s deal won’t pass parliament, but what then? The odds are rising that we will have a fudge/delay on the March 29 deadline next year. I can’t see a second referendum because there is no clear “either-or” option to present to the UK population.

AUD – a triple whammy for the AUD overnight on withering hopes for a US-China trade deal, weak risk appetite and a miss on the Australia Q3 GDP (+0.3% QoQ vs. +0.6% expected).

CAD – our operating assumption is that USDCAD offers weak beta to further USD strength. Instead, we like to focus on CAD in the crosses, particularly AUDCAD here, which may have turned a corner.

NZD – AUDNZD takes out the 1.0600 area trendline on the missed GDP print overnight, but NZDUSD looking vulnerable up here above the 0.6900 level if we can’t get US-China trade deal hopes back on the rails.

SEK – EURSEK reluctant to break lower when markets suffer the degree of market volatility and weak risk sentiment seen yesterday. Still, the pair trades heavily and could shift to 10.10-10.00.

NOK – the oil rally faded yesterday as did the NOK rally. Next week looks pivotal with Norway’s November CPI up on Monday, GDP on Tuesday and a Norges Bank announcement on Thursday.

Upcoming Economic Calendar Highlights (all times GMT)

US Markets closed today for US President George H. W. Bush memorial
0900 – Eurozone Nov. Final Services PMI
0930 – UK Nov. Services PMI
1000 – Eurozone Oct. Retail Sales
1500 – Canada Bank of Canada rate decision
1900 – US Fed Beige Book


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.