Analysts at TD Securities explained that despite finishing nearly flat on the day, equities endured a tumultuous session as Trump’s trade tariff threat ratcheted higher, this time threatening an additional tax on $267bn worth of goods.
Key Quotes:
“The USD was bid across the board (SEK the exception) following a positive surprise on payrolls, which included stronger wage inflation.”
“DBFX were major laggards, with AUD breaking through notable supports located near 0.7150 (-1% on the day). EUR/USD finds support near 1.1550 weekly range lows (-0.5%). The 5s30 curve bear flattened ~3bps & 10s sold off by 5bps towards 2.95%.”
USD/CAD spikes towards 1.32 resistance following a disappointing jobs report.”
“Over the weekend we’ll be watching the Swedish election and Chinese trade data.”
What we’re watching in markets
“Risk sentiment remains tenuous at best, as US/China trade anxiety has hit a fever pitch leaving DBFX in the crosshairs. AUD is a well populated short and our HFFV suggests the currency is nearly 4-5% cheap vs. the USD. A concession in trade wars could see AUD viciously snapback however.”
“A jammed-pack week for central bank meetings that include the BOE, ECB and the CBRT. Neither the ECB nor the BOE are expected to be eventful especially after key decisions in June and August respectively. This should leave trade developments – and US-centric developments in focus. The CBRT will have to convince markets that it stands ready to act and we look for a hike in the 1-week repo rate to 22%. Treasuries bear steepened sharply in the wake of the strong payroll report, and will look to trade news and the CPI report for direction next week.”
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