Trump Denies Tariff Rollback, Triggers FX Pullback

Trump Denies Tariff Rollback, Triggers FX Pullback
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After all of this week’s conflicting headlines, the only real truth is that President Trump isn’t ready to back down on his trade war with China. There’s no doubt that China wants the tariffs cancelled and on Thursday it seemed as if both sides want to include that in the phase one trade deal. However on Friday, Trump made it clear that nothing has been decided – he said that while China wants the US to rollback tariffs, he hasn’t agreed to them. This suggests that even though the US and China hope to have a deal on paper next week negotiations aren’t going as well as the market had thought. All of the Japanese Yen crosses tumbled in response including USD/JPY. High beta currencies like the Australian and New Zealand extended their slide with the Canadian dollar and euro trailing not far behind. The winds could still shift in right direction because the US could offer China a partial and not full reversal of tariffs. This gesture of goodwill could be enough to satisfy the market and sustain the rally in equities and currencies. Its no secret that President Trump keeps a close eye on stocks and in many ways, consumers do so as well. With equities hitting record highs, the University of Michigan reported improvement in consumer sentiment . We’ll get a better look at how the US economy is performing with next week’s inflation and retail sales reports. We are looking for firmer numbers but nothing […]

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