Trump ups the ante on Chinese imports
Just as the public consultation on the last proposed tariffs came to an end and markets were hoping for possible compromise talks, so US President Trump has said he is ready to tax ALL imports “at short notice” thereby taking the tariff war to the next level.
China maintains high trade surplus
Data released at the weekend showed China’s trade surplus held near record levels in August as exporters rushed to front-load orders before possible full-blown tariffs are put in place. Exports rose 9.8% y/y in dollar terms, just below the 10.1% economists had expected, while the trade surplus narrowed slightly to $27.91 billion from $28.05 billion in July. Imports beat estimates, rising 20.0% y/y, more than the 18.7% anticipated.
The strong imports number is helping the Australian dollar to hold above the 0.71 level whilst facing an ever-buoyant US dollar. AUD/USD touched a 2-1/2 year low of 0.7099 on Friday after the stellar US non-farm payroll release and the low this morning has been 0.7100. Should this level break, then the February 2016 low of 0.69738 could be tested via the psychological 0.7000 level. The pair is currently hovering at 0.7115.
AUD/USD Daily chart
Krona barely moved after inconclusive election
The Swedish Krona is marginally firmer against the US dollar after Sweden’s weekend election. The country may face weeks or even months of political gridlock after an inconclusive result left the country without a clear candidate to form a government. EUR/SEK is now at 10.4410 after briefly touching a three-week low of 10.4363 earlier today.
UK GDP the data highlight
It’s a slow day on the data front to start the week. The highlight will likely be UK GDP for July, seen advancing 0.3% m/m from June’s 0.1%, together with the UK industrial production and trade data for July. The only major item on the US calendar is a speech by Fed member Bostic (neutral, voter).
The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/
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