Trump Roils Forex Markets With Tariff Warning
A late-night tweet from President Trump saw a lively start to the Asian session, seeing demand for JPY spike whilst Asian equities, oil and commodity FX fall in tandem. It’s all in response to Donald Trump’s tweet on trade – where he’s vowed to increase tariffs on Chinese imports this Friday, up from 10% to 25% on $200bn worth of goods.
The yuan fell to its lowest level since January, allowing USD/CNH to break higher form a basing pattern and raise the prospect that the end of the correction from the 2018 highs has been seen. USD/JPY gapped lower and bears could be tempted to fade into rallies below 111 as the week progresses. We expect trade headlines (and probably more tweets) to drive sentiment this week.