TheÂ US dollar is trading sideways against several major currencies, suggesting that investors are waiting toÂ see theÂ fallout from anÂ announcement that theÂ White House is raising tariffs onÂ $200 billion onÂ Chinese imports byÂ theÂ end ofÂ theÂ week. With data light onÂ theÂ calendar inÂ theÂ coming days, traders are focused primarily onÂ geopolitical events surrounding theÂ buck.
Recently, President Donald Trump tweeted that the US government would be increasing tariffs from 10% to 25% on more than $200 billion worth of Chinese goods by Friday. Also, another $325 billion of additional goods would be âshortlyâ introduced. He tweeted:
ForÂ 10 months, China has been paying Tariffs toÂ theÂ USA ofÂ 25% onÂ 50 Billion Dollars ofÂ High Tech, andÂ 10% onÂ 200 Billion Dollars ofÂ other goods. These payments are partially responsible forÂ our great economic results. TheÂ 10% will go up toÂ 25% onÂ Friday. 325 Billions Dollars ofÂ additional goods sent toÂ us byÂ China remain untaxed, but will be shortly, atÂ aÂ rate ofÂ 25%. TheÂ Tariffs paid toÂ theÂ USA have had little impact onÂ product cost, mostly borne byÂ China. TheÂ Trade Deal with China continues, but too slowly, asÂ they attempt toÂ renegotiate. No!
TheÂ move blindsided theÂ market, considering theÂ number ofÂ reports inÂ recent weeks that suggested Washington andÂ Beijing were onÂ theÂ cusp ofÂ reaching aÂ new trade agreement. AsÂ recently asÂ March, it had been reported that President Trump andÂ President Xi Jinping would soon be signing aÂ deal that would ratify aÂ new agreement between theÂ worldâs two largest economies.
US-China trade talks are expected toÂ continue onÂ Tuesday. AÂ delegation ofÂ Chinese negotiators will be inÂ Washington, aÂ meeting which could give some hint asÂ toÂ theÂ state ofÂ negotiations.
Once theÂ markets opened onÂ Monday, equities plunged andÂ theÂ leading US stock indexes were down byÂ asÂ much asÂ 1%. Asian markets also cratered onÂ theÂ news.
Analysts warn that theÂ losses would have been much steeper if it were not forÂ theÂ strong April jobs report that showed aÂ gain ofÂ 263,000 jobs andÂ aÂ 49-year-low unemployment rate ofÂ 3.6%Â â anything under 4% is considered full employment byÂ most economists.
OnÂ theÂ data front, investors will mostly comb through inflation data this week, including theÂ producer price index (PPI), inflation, consumer inflation expectations, andÂ import andÂ export prices.
TheÂ USD/CAD currency pair was relatively flat atÂ 1.3428, from anÂ opening ofÂ 1.3422, atÂ 18:11 GMT onÂ Monday. TheÂ EUR/USD was also trading sideways atÂ 1.1207, from anÂ opening ofÂ 1.1202.
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