NY Open: Trump trade talk tips Wall Street into the red

Forex 4 minutes to read

Michael O’Neill

FX Trader, Loonieviews.net

Summary:  Wall Street closed yesterday with solid gains. Those gains are at risk this morning as President Trump talks a tough line on trade, with both China and Europe in the crosshairs.


Wall Street closed yesterday with solid gains. Those gains are at risk this morning. The Dow Jones Industrial Average (DJIA) is down 166 points as of 14:00 GMT, which is a loss of nearly half of yesterday’s gains. The S&P 500 and Nasdaq are also in the red as traders react to President Trump’s China comments in the Wall Street Journal. He told the reporter that if the US/China trade talks do not go America’s way, he will slap tariffs on the remaining China imports that are still duty-free. He also threatened to raise the existing tariff amount from 10% to 25%.

This morning, Federal Reserve vice-chair Richard Clarida said: “the path for the federal funds rate should be data-dependent.” He went on to explain that data-dependency is important within the framework of how the data impact the rate of unemployment consistent with maximum employment and the riskless rate of interest consistent with price stability.

In other words, rates are going higher if inflation does.

The US dollar added to its overnight gains in New York trading despite weaker than expected Case-Shiller Home Prices (actual 5.1% versus a forecasted 5.3%) and a soft Housing Price Index (actual 0.2% versus a forecasted 0.4%).

GBPUSD selling intensified as New York reacted to President Trump suggesting a UK/US trade deal may be difficult under the Brexit terms. Prices dropped from 1.2757 to 1.2732 before bouncing.

EURUSD is under pressure, in part because of a report that Trump could impose 25% auto tariffs next week (Canada and Mexico would be excluded). EURUSD broke support at 1.1320 and is looking for a break of 1.1270 to trigger additional selling to 1.1210.
EURUSD
Chart: EURUSD 30-minute (source: Saxo Bank)

Related Articles

Saxo Bank A/S - Representative Office
Boulevard Plaza - Tower 1
30th floor, office 3002
Dubai Downtown, Burj Khalifa area
Dubai
UAE

UAE

Trade responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.