President Donald Trump caught everyone by surprise by announcing an additional 10% Tariff on 300 Billion Dollars of Chinese goods starting September 1. The effect of this little tweet was a rush out of risk assets into the traditional safe havens of Gold, JPY and the CHF. Trump’s thinking is that the Chinese are not moving quick enough on the trade talks.
I do wonder however if the new tariffs had more to do with the FOMC not cutting rates aggressively enough for the crazy Presidents liking. Let’s not forget that the FOMC see the trade war as a reason to cut rates. So it is reasonable in Trump’s twisty tiny mind to escalate the trade war to force the FOMC to cut interest rates more aggressively and possibly give the Chinese trade delegation an incentive to hurry up an agreement.
Trump thinks the outcome of his action will be a win win situation for him.
I rather think that the new tariffs on Chinese goods have stolen the NFP’s thunder, so what ever the number good or bad the market will be thinking about other factors today. So currency moves may be less than enthusiastic as July’s NFP will be confined to just a footnote to this weeks extraordinary Presidential outbursts.
Other data today will include Euro Zone PPI. Retail Sales, UK Construction PMI for July so not much to worry about there.