The markets have had a couple of consolidatory sessions over the last day or so as we move towards the latest US jobs report and the possibly more influential implementation of US tariffs on Chinese imports. Equity markets were once again on the back foot across global indices with the US tech market leading the way in the North American session as further scrutiny comes on the big players from Washington. The market is poised to receive the latest round of tariff implementation from the Trump administration today as well as the inevitable Chinese retaliatory measures. A significant amount of downside risk has been priced into the market, but there could still be more to come with news that President Trump may also be setting his sights on the Japanese trade relationship.
We saw another sign of potential trouble in the EM currency market yesterday with the Philippine Peso seeing a dramatic break to the downside as domestic stocks took a big hit with inflation soaring. The USD/PHP had topped on a number of occasions in the few months just under 53.60 and yesterday the dam broke and it jumped up to a high around 53.82, its now trading at levels not seen since 2005. Once again investors are concerned that we will see contagion into other EM’s and further into developed world markets. As the main catalyst for these sharp EM currency depreciations in the last few months has been the global trade tensions brought about from tariff implementation, further tariff increases later today may accelerate the moves we are seeing.
It’s relatively quiet on the economic data release front today for the first two sessions and market focus will remain firmly on the news wires and tariff developments and the implications. Investors will however be more than aware that we have the NFP’s coming up on the New York session where the focus will be not only on the headline number but the earnings data with it. Loonie traders will also have contend with the Canadian employment data being released at the same time. All it all, there is the potential for us too see a very volatile end to the trading week today.