ForexLive Asia-Pacific FX news wrap: Trump tariff war triggers USD surge, ‘risk’ slump

Tariffs, read from the bottom up for the chronology

• JP Morgan on Trump tariffs – reinforce their bullish view on gold
• Persistent Trump tariffs mean a minus 5% hit to Canada’s economy, Mexico -8%, US -1%
• AUD/USD dipped under 0.61
• Ethereum implodes
• Bank of Canada will implement six consecutive quarter-point interest rate cuts
• Goldman Sachs says the medium term risks to oil prices is skewed to the downside
• US TreasSec Bessent said tariffs inflationary, not good “for a US industrial renaissance”
• AUD/USD falls to to its lowest since early 2020
• Trump says he’ll speak with Canada’s Trudeau on Monday
• Trump tariffs end ‘self-delusion in markets’
• Trump’s tariff trade war launch bolsters the case for Reserve Bank of Australia rate cuts
• Trump tariff trade war – inflation, economic shock, hit to consumers, supply chain chaos
• New Zealand benchmark equity index, S&P/NZX 50 falls nearly 2%
• Trump inflicts economic pain for Americans with his tariff war launch
• Early Monday – Trump tariffs slam Stocks, surge the USD
• Trump and Dump
• Goldman Sachs: We think Canada and Mexico tariffs are likely to be short-lived
• Trump: Tariffs on Canada can be removed if ‘enough steps’ taken to reduce health crisis
• White House says Trump has signed order to impose tariffs on Canada, Mexico and China

Other

• Federal Reserve speakers on Monday include Bostic and Musalem
• Caixin China Manufacturing PMI (January 2025) 50.1 vs. expected 50.5
• Australia retail sales December 2024 -0.1%% m/m (expected -0.7%)
• Australian building permits for December 2024: +0.7% m/m (expected +1.0%)
• Japan Manufacturing PMI January (final) 48.7 (prior 49.6)
• Australian private survey of inflation, January 2025: +0.1% m/m (prior +0.6%)
• BoJ January meeting summary – one member cited upside inflation risk
• Preview of the FX options expiries for Monday, February 3, 2025 at the 10 am NY cut
• Australia S&P Global PMI Manufacturing January, final read 50.2 (flash 49.8 prior 47.8)
• Trade ideas thread – Monday, 3 February, insightful charts, technical analysis, ideas
• Newsquawk Week Ahead: US, Canada and NZ Jobs, US ISMs, BoE, EZ CPI, BoJ SOO, JMMC
• Weekly Market Outlook (03-07 February)
• Forexlive Americas FX news wrap: A tangled tariff web we weave

Over
the weekend Trump announced tariffs on China, Canada and Mexico.

Markets
here in the very early hours started with a large gap higher for the USD. On
the flip side, large gaps down for CAD, EUR, AUD, GBP, NZD. There was
some early support for the yen on the basis of expectations of ‘safe
haven’ flow benefiting JPY but USD/JPY has subsequently traded
higher.

Of
the large gaps down for those currencies, any gap fill has been minor
only – large holes remain.

Equities
in the region have been hit lower, Japan’s Nikkei is down 2.5% or
so.

US
equity index futures had a large gap lower upon Sunday evening trade
opening the week. As I post these are barely off their lows.

Crypto
is lower, at one stage ETH/USD was down circa 30%.

Gold
is lower.

There was other news and data, but much of it was not viewed with much interest due to the intense focus on the tariff inflicted market turmoil.

• The Caixin China Manufacturing PMI for January 2025 squeeked in an expansion, its fourth consecutive month, at just 50.1. Employment fell in the sector.
• Australian retail sales fell in December m/m but not as badly as expected

The USD index:

This article was written by Eamonn Sheridan at www.forexlive.com.