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  • The Dow, S&P 500 and Nasdaq drop at least 2% after Washington doubles down on threatening China with tariffs.
  • USD/JPY is prints fresh lows at 110.17.    

The Wall Street Journal notes that U.S. stock declines deepened Tuesday, with the Dow Jones Industrial Average falling more than 500 points, as investors reacted to a growing likelihood that the White House will follow through on threats to enact tariffs on Chinese goods later this week.

In recent trade, the markets have extended the downside with the DJIA now trading below the 26000 psychological level. As noted by the Soth China Washington Post, China are not about to kneel to Trump and markets have caught on to this:

  • ‘Do not even think about it’: Beijing refuses to give in to Trump’s latest threat on trade tariffs – SCMP

The Main issue is that Trump seeks improvement on the bilateral trade balance more than anything else and China can’t deliver on that, so this could  go on and on “¦ and hence risk appetite is slumping.

  • USD/JPY is now printing fresh lows, -0.55% at 110.19.