Trump ups the trade war ante

Michael McKenna

Head of Editorial Content, Saxo Bank Group

"The trade war headlines have come full circle," reports Saxo Bank Head of FX Strategy John Hardy. In this case, of course, 'full circle' means a return to President Trump's initial aggressive stance with the administration prepared to more than double the planned tariffs on $200 billion in Chinese imports in an attempt to get Beijing to the negotiation table.

In the forex space, Hardy notes the dollar's continued strength despite a slight June PCI inflation miss with the JPY as the largest mover in the wake of Monday's Bank of Japan meeting.

"The BoJ's ultra-loose policies are set to continue," says Saxo fixed income specialist Althea Spinozzi, who adds that governor Kuroda 'blinked' in the face of market pressure and let the 10-year Japanese government bond yield fluctuate 20 basis points around zero.

"The JPY weakness followed the initial plunge in JGB yields," says Hardy, who adds that the yield move – but not that of the currency – has since retraced.

In stocks, Apple shares gained 4% after hours following a strong earnings release while in the commodities space, Saxo Head of Commodity Strategy Ole Hansen says that trade war fears appear to be offsetting supply risks in crude oil while gold remains significantly correlated to CNY with key support at $1,210/oz.

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