China announces tariffs of 34% on all US goods in retaliationRisk-off flows intensify ahead of US tradingTraders are now pricing more than 50% chance of a fifth cut by year-endAUD hit the hardest amid the risk-off flowsGold picks itself back up as the trade war rhetoric escalatesOil sinks to lowest in almost two yearsWhat is the distribution of forecasts for the US NFP?Germany February industrial orders 0.0% vs +3.5% m/m expectedGermany March construction PMI 40.3 vs 41.2 priorUK March construction PMI 46.4 vs 46.0 expected
Markets:
CHF leads, AUD lags on the dayDAX down 4.7%, CAC 40 down 4.2%; S&P 500 futures down 3.5%US 10-year yields down 15 bps to 3.895%Gold flat at $3,112.34WTI crude down 8.3% to $61.02Bitcoin down 0.3% to $82,128That led to intense risk selling across the board, deepening the market rout from yesterday.
As China retaliated, the aussie is one of the biggest losers with AUD/USD now down some 3.6% on the day to test waters below 0.6100. The low earlier hit 0.6050, which was the lowest since the Covid pandemic during March 2020. That comes as traders are now pricing in rate cuts by the RBA for each of the next three policy meetings.
In the commodities space, there was also plenty of action to note. Gold was struggling very early on before catching strong bids after China's retaliation in pushing up from $3,090 to a high of $3,136. The precious metal is giving back gains though as volatile trading continues in the precious metals space. I talked about some of that earlier here.
All that said and done, it is best to be reminded that Trump's reciprocal tariffs will only go into effect on 9 April. And China's counter-tariffs are to only go into effect on 10 April. There is still time for both sides to negotiate and tone down the rhetoric. That's the key thing to be aware of in my view.
Coming up, we'll still have the US jobs report and Fed chair Powell's speech to deal with. Don't underestimate either. A bad set of labour market numbers will only serve to heighten recession risks and a lack of clarity support from Powell could do the same as well.
There's still much more volatility to deal with before the weekend comes along. Be safe and have a good one, everybody.
This article was written by Justin Low at www.forexlive.com. Read More Details
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