We actually saw a relatively quiet trading day yesterday as the market digested the most recent escalation in the US-China trade situation, the equity markets remained on the back foot and we saw most of the other risk assets trade within recent ranges. However, just when we thought it was safe to stick our heads over the risk parapet, President Trump has come out early in the Asian session with news that he’s planning on implementing a further $200B in tariffs on Chinese imports. It’s another aggressive play from the Trump administration and we’ve seen the markets react accordingly with risk trades taking a hit across the board, yen has appreciated strongly against all the majors and the equity markets are set for another day firmly in the red.
Overnight, we heard fairly confident and positive rhetoric from various members of the Fed but I’m sure many of us would like to be a fly on the wall when they discuss the implications of the continuing protectionist policies from the current administration and the potential effects on global and US domestic growth. There’s no doubt that not all the comments will be entirely complimentary from the policy makers.
So, once again the trade issues are set to dominate sentiment in the trading sessions ahead. It’s quiet again in terms of fundamental data releases, with this morning’s release of the RBA’s monetary policy meeting minutes unlikely to provide much interest, however, we will get to hear from some major central bankers today with the ECB forum in Portugal taking place. Later in the day, the US is set to release its latest Building Permits numbers and Kiwi traders will be watching for the latest GDT Price Index data.