The US President Trump’s overnight tweet, threatening tariffs hike on the Chinese imports, re-ignited US-China trade tensions and killed the appetite for the risk/ higher-yielding assets across the financial markets in Asia this Monday. Therefore, the safe-havens such as the Yen and gold were boosted at the expense of the risky assets -the Antipodeans, oil, Treasury yields and Asian equities. The USD/JPY pair tumbled to the lowest levels in six weeks near 110.30 before recovering to 110.65 levels. The Chinese proxy, the Aussie, hit fresh four-month lows of 0.6963 while the Kiwi attacked the 0.6600 level. However, the Antipodeans were somewhat rescued by an unexpected rise in the Chinese Caixin services PMI data. The risk currency, the GBP, faced double-whammy from risk-aversion on one hand while the renewed Brexit pessimism weighed on the other hand. The Cable dropped back towards the 1.31 handle while the EUR/USD pair traded marginally lower, but capped by the 1.1200 mark. Meanwhile, the Loonie also suffered heavy losses amid a sell-off in oil prices, despite reports that President Trump is considering imposing new sanctions on Iran. Gold prices on Comex bounced to test the key resistance near 1285 levels. Main Topics in Asia US-China trade update Trump’s threat to lift tariffs on Chinese imports sends risk assets into reverse China considers cancelling trade talks with us this week after trump threats -WSJ Chinese Vice Premier Liu He has cancelled trip to Washington; Yen rallies to highest levels since… China’s Vice Premier Liu He will very unlikely go to the US this week – Global Times Source: Chinese officials have postponed their flights to Washington – CNBC Brexit update Brexit: Theresa May will take a final desperate gamble to deliver Brexit this week – The Times Labour MPs say they won’t back a Brexit deal without a people’s vote – The Guardian PM Theresa May has held secret discussions over a three-way second referendum – Telegraph Other key updates US Pres. Trump to impose new sanctions on Iran – Axios WTI broke $60.70/60 support-confluence as US-China trade deal becomes uncertain China’s Caixin services PMI rises to 54.5 in April, a positive surprise New Zealand’s Treasury: H2 growth may be slightly under forecast (NZD keeps the red) PBOC to lower reserve requirements for small and medium banks from next week Asian stocks are sea of red as US-China trade tensions escalate Indonesia’s GDP expands 5.07% y/y in Q1, misses estimates Key Focus Ahead After a holiday-thinned, but volatile Asian session, markets look forward to a relatively busy EUR calendar amid early May Day holiday in the UK. The services PMI reports from the across the Euro area economies will start dropping in at 0715 GMT, with the key German and Eurozone PMI data due at 0755GMT and 0800 GMT respectively. The immediate focus will be on the Eurozone Sentix investor confidence due at 0830 GMT and the bloc’s retail sales report slated for release at 0900 GMT. The NA session remains data-empty, with the central bankers” speeches to headline. At 1330 GMT, the FOMC member Harker will hit the rostrum. The Bank of Canada (BOC) Governor Poloz will speak later today at 1745 GMT. Amid a lack of first-tier macro releases on both sides of Atlantic, the souring US-China trade talks-related developments will continue to drive the sentiment in light trading ahead. EUR/USD: US-China trade-led risk-off may cap upside The re-escalation of trade tensions and the risk-off, as represented by the slide in Asian stocks, will likely boost haven demand for Treasuries (and USD) and cap gains in EUR/USD. GBP/USD drops to re-test 50-day SMA as risk aversion/Brexit doubts rule on the UK holiday While there seems little on the economic calendar, latest risk-odd moves backed by tensions between the US and China could become an important driver. GBP/USD Forecast: Brexit talks and GDP set to break the balance The upcoming week consists of fewer events but that does not necessarily imply fewer dramas. The most significant driver of Sterling remains Brexit. If PM May and opposition leader Corbyn clinch an agreement, the pound could soar. Week Ahead: RBA, RBNZ and US CPI The week ahead features two key interest rate decisions from the Reserve Banks of Australia and New Zealand, as well top-tier data from the Eurozone, China and the US. FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next AUD/USD risk reversals: AUD bearish bias strongest since January ahead of RBA FX Street 3 years The US President Trump's overnight tweet, threatening tariffs hike on the Chinese imports, re-ignited US-China trade tensions and killed the appetite for the risk/ higher-yielding assets across the financial markets in Asia this Monday. Therefore, the safe-havens such as the Yen and gold were boosted at the expense of the risky assets -the Antipodeans, oil, Treasury yields and Asian equities. The USD/JPY pair tumbled to the lowest levels in six weeks near 110.30 before recovering to 110.65 levels. The Chinese proxy, the Aussie, hit fresh four-month lows of 0.6963 while the Kiwi attacked the 0.6600 level. 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