The Japanese currency was a clear winner across the FX space in Asia on the final trading day of this week, as escalating US-China trade tensions heighten the risks of a full-blown global trade war. Amidst market panic and uncertainty, the US dollar was heavily sold-off versus its main competitors, in turn lifting the demand for the Antipodeans.
The Asian equities were in a sea of red alongside Treasury yields, with 10-year Treasury yields testing the key support below 2.80%. However, oil prices stood resilient to risk-off flows and climbed 1% amid Saudi Arabian headlines on production cuts.
Main topics in Asia
Germany's Merkel: EU will retaliate if the US raises tariffs
German Chancellor Angela Merkel, while speaking to reporters in Brussels, said the European Union (EU) is waiting overnight to see US tariff plan and will retaliate if the world's largest economy raises tariffs on EU imports.
H.R. McMaster to resign as US national security advisor, successor named - NY Times
Following reporting a week ago that president Trump was planning on firing his national security advisor, H.R. McMaster has announced his retirement today.
China plans $3 billion of import tariffs against 128 US products - Reuters
China's commerce ministry is planning measures against up to $3 billion of U.S. imports to balance US tariffs against Chinese steel and aluminum products, according to a Reuters report.
Trump exempts Canada, Mexico, EU, Australia and others from tariffs
The news is flowing in via LiveSquawk that Trump administration has issued tariff exemptions for Canada, Mexico, Argentina, European Union (EU), Australia, Korea and Brazil.
US 10-year treasury yield is on the retreat, nears key support at 2.77 percent
The escalating US-China trade situation and the resulting risk aversion seem to have boosted demand for the safe haven treasuries.
China MOFCOM: “Hopes the US will pull back from the brink”, as Trump unveils tariff plans
The Chinese Commerce Ministry (MOFCOM) urged the US administration to withdraw its plans to impose up to $ 60 billion tariffs on the Chinese goods in a statement released on Friday, Reuter’s reports.
Nikkei hits 5.5 month low, S&P 500 futures drop 0.6 percent
Stock markets in Asia are flashing red on the increased odds of a full-blown US-China trade war.
US Congress approves spending bill for $1.3 trillion
After much back-and-forth, the US Congress has approved the government spending bill and averted shutdown …
Key Focus ahead
After a data-heavy European calendar so far this week, Friday is likely to be a quiet EU session, as the dust settles over the BOE aftermath while traders digest the dozens of headlines hitting the wires on the US-China trade issues. There are no macro updates from Euroland and UK docket and hence, the focus will remain on the BOE’s Quarterly Bulletin and the FOMC member Bostic speech.
On the other hand, the NA session has plenty of risk events, including the Canadian retail sales and CPI numbers while the US durable goods orders and new home sales will also offer fresh trading impetus to the traders. Besides, the speech by the BOE MPC member Vlieghe will be also eyed, following yesterday’s policy decision.
EUR/USD grinding higher amid Dollar selling, trying to maintain 1.23
It's a quiet showing on the macro calendar for Friday, and the Euro is set to finish off the trading week being led by the nose through market sentiment as traders chew on the possibility of an all-out trade war between the US and China.
GBP/USD: Upside bias intact, but trade confrontations could hurt Pound
The trade war fears will likely overshadow the BOE's quarterly bulletin release (due at 12:00 GMT). Meanwhile, BOE member Vlieghe's speech due at 12:30 GMT could influence the British Pound.
China is not backing down, and why should they?
While traders were debating the level of FOMC hawkishness after ” Jittery Jay” nudged the longer term FOMC dots higher, they were utterly overwhelmed by risk aversion and all but gave up on the currency strategy and followed the flow.
US durable goods orders to rebound in February - Barclays
The Barclays Research Team offer a brief preview on today’s US durable goods orders data slated for release at 1230 GMT.
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