Trump Sends Global Markets into Tailspin, US Jobs Data in Focus

Equities tumbled, while the safe-haven yen skyrocketed after US President Trump threatened to impose fresh tariffs on the remaining of the Chinese products imported to the US. The fears of further escalation in the US-China trade dispute prompted investors to increase their Fed-cut bets, which may be adjusted again today after the US jobs data are out. Yesterday, we also had a BoE decision, with British policymakers keeping their policy and guidance unchanged.

Safe Havens Rally as Trump Threatens China, NFPs on the Agenda

The dollar traded mixed against the other G10 currencies on Thursday and during the Asian morning Friday. It gained against AUD, GBP, NZD and NOK in that order, while it depreciated against JPY, CHF EUR and SEK. The greenback was found virtually unchanged against CAD.

The skyrocketing of the yen, alongside the strengthening of the franc and the weakening of the commodity-linked currencies, suggests that, at some point, investors were spooked, reduced their risk exposure and sought shelter in safe havens. This is evident by the performance in the equity market as well. Although most major EU bourses closed in positive territory, all three of the US indices traded south, with the beating rolling into the Asian trading today. Both Japan’s Nikkei 225 and China’s Shanghai Composite fell 2.20% and 1.41% respectively.

The trigger behind the turbulence was comments by US President Trump, who said that he will proceed with a 10% tariff rate on the remaining Chinese imports, starting on September 1 st. The announcement comes just a day after a round of negotiations in Shanghai, which was reportedly constructive and allowed more talks to follow in September. That said, it seems that Trump was not so satisfied and decided to end the ceasefire he agreed just a month ago with his Chinese counterpart Xi Jinping at the G20 summit. There were also reports that the US President is scheduled to make a statement on trade with the EU today, where fresh threats may throw the financial world into a deeper turmoil.