Risk aversion dominates the markets as US-China trade war escalates again with Trump’s new tariffs. In particular, 10-year yield dived through 2% handle with ease and determination, to close at 1.894, lowest since November 2016. In the currency markets, Yen and Swiss Franc overtake Dollar’s position as the strongest and second for the week. Sterling remains the worst performing one for its own no-deal Brexit dear. Australian Dollar is mixed for today, but second worst for the week.

Technically, EUR/JPY breaks 118.62 key support to resume down trend from 137.49 (2018 high). GBP/JPY is extending the fall from 156.59 (2018 high) towards 122.36 (2016 low). USD/JPY is back pressing 106.78 low and break will resume the fall from 112.40 towards 104.69 low.

In Asia, currently, Nikkei is down -2.45%. Hong Kong HSI is down -2.21%. China Shanghai SSE is down -1.78%. Singapore Strait Times is down -0.76%. Japan 10-year JGB yield is down -0.0362 at -0.167. Overnight, DOW dropped -1.05%. S&P 500 dropped -0.90%. NASDAQ dropped -0.79%. 10-year yield dropped -0.127 to 1.894.

Trump announces new tariffs on China, effective Sep 1

Just days after US trade team concluded a meeting with China in Shanghai, Trump suddenly announced to start imposing 10% tariffs on USD 300B of Chinese imports. That’s effectively the rest of all untaxed Chinese goods. New tariffs are expected to take effective on September 1.

Trump complained that Chinese President Xi Jinping was “not going fast enough” with his promises even Xi wanted to make a deal. And he threatened to raise tariffs further if China fails to more move quickly onwards. That could include moving beyond 25% tariffs already imposed on another USD 250B of Chinese imports.

Japan Aso: US-China relation developing into not just trade war

Japan Finance Minister Taro Aso warned on Yen’s recent gains today and emphasized importance of exchange rate stability. He spoke as Yen surges through key levels on risk aversion, after Trump announced new tariffs on China. Aso said Yen’s fluctuation “will have various impacts”. And “at least, current stability is extremely important. We need to pay close attention to the markets”.

On Trump’s new tariffs on China, Aso said “this will surely affect China’s economy, which I think will have various impacts on the global economy”. And, “there’s already a movie among companies to shift factories out of China. It’s developing into not just trade war but various other things, so it warrants careful attention.”

Source: www.actionforex.com