Forex news for North American trade on August 30, 2018:
- Trump said to back $200 billion tariffs as early as next week - report
- Canada Q2 GDP annualized 2.9% vs 3.1% q/q expected
- US July PCE core inflation +2.0% y/y vs +2.0% y/y expected
- US weekly initial jobless claims 213K vs 212K expected
- Germany August preliminary CPI +0.1% vs +0.1% m/m expected
- Argentina sold $330m to prop up the peso today
- China Vice Premier Liu: China and Japan should protect free trade
- FT reports: IMF has agreed to revise Argentine bailout terms.
- Freeland says continue to be optimistic about NAFTA talks
- Atlanta Fed Q3 GDPNow 4.1% vs 4.6% prior
Markets:
- Argentine peso falls as much as 20%
- Gold down $6 to $1200
- S&P 500 down 13 points to 2901
- US 10-year yields down 2.5 bps to 2.86%
- WTI crude up 64-cents to $70.15
- JPY leads, NZD lags
The early story was a soft Canadian GDP report. Beyond the headline, numbers on business investment sagged to the worst since 2016 in defiance of BOC forecasts. That boosted USD/CAD up to 1.3000 from 1.2925 but the pair wasn't able to break definitively through on three pushes and sagged back to 1.2975.
The late story was a report saying Trump wants to announce $200 billion in tariffs on China on Sept 6 in what would be a major escalation to the trade war. It would cover virtually everything with a 25% import tax. USD/JPY sank to 111.00 from 111.20 on the headlines to finish at the lows of the day, down about 70 pips.
We got a taste of how the market might react to a full-on trade war with risk assets struggling but the US dollar not getting much of a lift anywhere. It lost ground against the CHF, JPY and even against the euro as that pair climbed back to 1.1675 from a low of 1.1640.
After yesterday's fireworks it was a day of consolidation and the pair finished down 12 pips to 1.3015, climbing above the big figure after several forays below.
