All this puts the USD/CNY into a balancing act and into another down week. Jobs today could change all this. Don’t hold your breath. Risk today seems more wrapped into positions than themes or big picture views as we scramble to buy time and wait it out, writes Bob Savage.

Friday and U.S. unemployment report, two things that usually make for a dull day as markets want to digest the data before trading and then want to go home flat for the weekend.

Total nonfarm payroll employment increased by 213,000 in June and the unemployment rate rose to 4.0%. Average hourly earnings rose by 5 cents to $26.98, over the year increasing by 72 cents or 2.7%.

This urge to wait and see mixes with the underwhelming response of markets to the start of the U.S./China trade war. The tariff baton is in Trump’s hand to retaliate to the China retaliation.

A second round of tariffs on an additional $16 billion will probably go into effect in August. Trump has threatened to levy tariffs on another $200 billion in Chinese goods, though they won’t be ready to put into effect until the late fall. That risk seems understood but not priced by the market.

Oxford Economics forecasts that $50 billion in tit-for-tat tariffs will reduce economic growth by 0.1% in each country.

Another $200 billion takes that up to 0.3% in 2019.

Most of the trading world affected by Trump tariffs have responded and the “war” hasn’t derailed risk completely so we soldier on, asking what is next?

Jobs for today is the answer and the FOMC minutes were mixed as they debated the strength of the economy against the threat of trade disruption and the hit to confidence globally. For them there is a risk to waiting for clarity with bubbles and inflation in tow.

There is a circular reasoning to the mechanics of the present stalemate for momentum, the urge to fight the battle of Bull Run again seems strong, perhaps that is the history lesson to read from the Civil War where Washingtonians watched in picnics to their horror as the first big battle of the North and South led to a defeat of the Union Army and a hurried retreat.

This may be what some are hoping for with the U.S. trade policy positions, but don’t hold your breath.

View Bob Savage at TradersExpo New York in brief video interviews recorded Feb. 9:

How to create a risk parity portfolio
Duration: 3:25

How I pick assets on the basis of highest yield
Duration: 3:31

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