We saw some volatility towards the end of the trading day yesterday as President Trump announced plans for tariffs on Steel and Aluminium. We’d seen further appreciation in the dollar for most of the day before he announced plans for tariffs of 25% on steel and 10% on aluminium. This provoked strong reactions from US trading partners particularly Canada and the EU with the Euro jumping 60 pips after EU Chief Executive Jean Claude Juncker advised that the EU will react firmly to protect it’s interests. Investors reacted swiftly to the comments and the US stock markets were down across the board by the end of trading with the Dow finishing up down 1.68%, across the currencies we saw a flight to safety with Jpy and Chf having strong runs and the Dxy finishing down at 90.25 having approached 91.00 earlier in the day.
Looking ahead to today’s trading and it’s pretty thin on the ground in terms of fundamental data today in Asia and the focus will be on the continuing fallout from the US session. The focus will turn to the sterling as we move into the London session with UK PM Theresa May due to give a speech on Brexit. With the pound already on the back foot after she rejected the EU’s initial draft earlier in the week we expect to see further volatility in the Cable and sterling crosses. Into the New York session and we have Canadian GDP data due out but the main focus will be on the news wires and anything further in regard to the proposed tariffs.
Subscribe to RSA's FX Insight and get access to our daily market commentary.
If you have any questions or queries, please contact the team at info@sec.rakuten.com.au or visit our website.