AUDJPY, H1
AUDJPY is the biggest gainer on the day out of the main dollar pairings and associated cross rates, (as we discussed in today’s webinar, and clear from the Trades Board) about 25 pips off its highs but still showing a 0.5% gain. The high, at 81.01, is a three-week peak. A risk-on tone has underpinned the relatively high-beta cross. Beijing’s pledge to adopt a more pro-action fiscal policy saw the Shanghai Composite close with a 1.8% gain, offsetting the announcement of the widely anticipated new US tariffs, which will be at a lower than expected rate of 10%, at least for a time before rising to 25% on January 1.
China responded with a tariff list effective September 24 in sync with the $200 bln round of US tariffs, planning to levy new tariffs of 5-10% on $60 bln in US goods on 5,207 US products, in line with initial plans. It will also tariff liquid natural gas (LNG) on the list at 10% vs the 25% initially proposed, similar to other products. China vowed to respond to any new US tariffs forced by “US unilateralism and trade protectionism,” but also hopes to stop US trade friction and maintain a mutually beneficial trade relationship via “dialogue of mutual respect and equality.” Yet, as NEC director Kudlow has said, “Just say ‘yes’ to something and we’ll cite progress and move on to the next issue.”
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Stuart Cowell
Head Market Analyst
HotForex
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