The USD may be hated but it’s going nowhere right now with risk for a test of 100-day at 91.135 should the U.S. jobs report matter, writes Bob Savage, CEO of Track Research Friday.
The tit-for-tat trade battle extends after a day of rest. Risk-off dominates today after President Trump orders the U.S. Treasury to consider $100 billion more in China tariffs, even as China keeps the door open for more trade talks.
The good news is that the Treasury isn’t seen as declaring China a forex-manipulator in its semi-annual report due April 18.
The Chinese yuan (USD/CNY) has gained about 10% from late 2016. What is interesting about the trading overnight is that the equity markets in Asia shrugged off the war of words while forex and rates had some doubts but quickly followed back to nearly flat.
Commodities are another story with oil lower, base metals lower, even gold loses as U.S. dollar goes bid ahead of jobs.
This shift in volatility matters and could foreshadow larger moves today after the U.S. jobs report and FOMC Powell. Bloomberg: US payrolls rise below-forecast 103,000 as wages pick up.
As for the other news today – not a stitch helped with the view about global growth
– with Japan household spending lower and wages not moving up with inflation;
– with German and Spanish Industrial Production lower than expected,
– with EU Retail PMI lower.
While weather can be blamed for some of the 1Q slowdowns, it not the whole story and the confidence holding maybe the real danger for 2Q as reality could bite.
We may be returning to U.S. volatility isolationism where the rest of the world wants to see global coordinated growth and does its best to ignore Trump and other facts.
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