Forexlive Americas FX news wrap: Fresh Trump tariff threat submarines markets

• Trump pledges an additional 10% tariff next week. Says Canada/Mexico tariffs still on
• White House confirms additional 10% on China for a 20% total
• US initial jobless claims 242K versus 221K estimate
• US January durable goods orders +3.1% vs +2.0% expected
• US Q4 GDP second reading +2.3% vs +2.3% expected
• Trump: Tariffs are are going to make our country rich
• Trump says Russia acting well and that a peace deal is “well advanced”
• There haven’t been intensive discussions around avoiding China tariffs – report
• OPEC + is hesitant on going ahead with plans April oil output hike
• KC Fed manufacturing index -5 vs -9 prior
• BOJ’s Ueda: Will make decisions on mon pol after scrutinizing US policy
• US January pending home sales index hits an all-time low
• Fed’s Harker: Policy remains restrictive enough to keep downward pressure on inflation
• Fed’s Hammack: Fed likely to hold rates steady ‘for some time’
• Fed’s Schmid: Concern growing about recent increase in inflation expectations
• WH Adviser Hassett: There’s a study coming out on tariffs on April 1st

Markets:

• Gold down $44 to $2872
• WTI crude oil up $1.53 to $70.15
• US 10-year yields up 2.8 bps to 4.28%
• S&P 500 down 1.6%, Nasdaq down 2.8%
• USD leads, AUD lags

It all came undone in the US session today. The mood was fair coming into US trade with S&P 500 futures +35 points but there were signs of trouble as Nvidia shares had given up an overnight gain following earnings. Then it all fell apart when Trump revealed a new 10% tariff on China slated for next week and reaffirmed the plan to hit Canada/Mexico after yesterday seemingly pushing it back by a month.

The market reaction was slow at first as it wasn’t clear if Trump meant a new 10% tariff on China or the one from the start of the month. In addition, the softer initial jobless claims number raised fresh questions about economic strength.

The moves started as a trickle but eventually became a flood, including an 8.5% drop in shares of Nvidia.

AUD was the laggard in FX in a sign that the fresh China tariffs were a big factor in the market price action. AUD/USD started US trading near 0.6300 and initially fell to 0.6250 and held steady there until a late-day crunch in risk assets and a fall to 0.6235.

It was similar across the board as the US dollar broadly strengthened. The exception was the yen, which largely tracked the USD move. An early tell may have been a counter-intuitive reaction to the US data slate with initial jobless claims. The higher number should have weighed on the dollar but it initially rose it what looked like a flow-driven move.

Some of the USD strength may have been on higher PCE inflation numbers in the GDP report. That could flow into revisions in tomorrow’s January report that could boost the y/y readings. That number will be closely followed but it will be tough for it to overshadow tariff talk and AI volatility. On the latter, every Mag7 stock was down at least 1.8% on Thursday.

This article was written by Adam Button at www.forexlive.com.