Trade War or No? FX Want to Know

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Market Drivers September 17, 2018
All tight ranges overnight
EU CPI in lines
Nikkei 1.20% Dax -0.44%
Oil $69/bbl
Gold $1197/oz.
Bitcoin $6500

Europe and Asia:
EU CPI 2.0%

North America:
USD Empire Man 8:30

It’s been a very quiet night of trademarked by very narrow ranges and little economic news, but risk FX pairs managed to stage a small rebound from Friday lows as some of the risk off fears abated.

The markets remain on edge regarding the possible fresh set of tariffs from US against China, with President Trump clearly eager to ratchet the tensions. His latest tweet noted that ”tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be ‘Tariffed!’”

However, latest reports suggested that US is considering a 10% rather than a 25% levy which was taken as sign of relief and may have helped EUR/USD and AUD/USD rally 20 pips from the Friday close.

Still, any move by US is unlikely to be ignored by the Chinese who will most certainly respond in kind and that could reignite the risk off flows as investors begin to fear the slowdown in trade and rise in input costs.

For now, the markets remain awaiting any actual actions from the key players and with little eco data on the calendar today we may remain in a state of suspended animation for the time being.

Boris Schlossberg
Managing Director

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