Trump Administration Ups Ante on Trade War

Daily Analysis - 02/08/2018

S&P 500 Tumbles Lower Amid Widespread Investor Anxiety

US equities ended mostly lower on Wednesday as renewed trade concerns more than offset gains in technology stocks. After the closing bell, the White House presented a proposal to increase tariffs on $200 billion worth of Chinese goods to 25.00% from the earlier announced 10.00%. On the economic data front, ADP and Moody's Analytics announced that the US private sector added 219,000 jobs in July, easily topping the 185,000 gain projected by Reuters. The upbeat report comes ahead of the Labor Department’s monthly nonfarm payrolls data, scheduled for release on Friday.

US Dollar Clings to Gains After Fed Stands Pat

The US Dollar is holding firm against the Euro in early Thursday trade after the Federal Reserve gave an upbeat assessment of the economy and remained on course to gradually raise interest rates. As was widely expected, the Fed left interest rates unchanged and remarked that economic growth in the country had been rising strongly. It further noted that the jobs market continued to display strength, while inflation managed to remain near the Central Bank's 2.00% target since its last policy meeting in June. The Fed currently anticipates conducting another two rate hikes before the year ends.

Loonie Strengthens on Signs of NAFTA Progress

The Canadian Dollar climbed to a seven-week peak against its US counterpart on Wednesday after a high-level trade official signalled progress in talks to update the NAFTA pact. Guillermo Malpica, the head of the Mexican NAFTA office, said the US had “started showing more flexibility” on the important issue of autos content rules, talks surrounding which have been dragging on for almost a year. The Loonie was also boosted by data that showed the pace of growth in Canada’s manufacturing sector remained at a robust level. The Markit Canada Manufacturing PMI came in at 56.9 last month, a marginal dip from the survey-record high of 57.1 recorded in June.

Gold Charts Weak Rebound

Gold prices edged higher in early Thursday trade, modestly recovering from a decline in the previous session when the US Federal Reserve left interest rates on hold. Spot gold was last seen around $1,218.50 per troy ounce, up 0.20%, following the -0.65% slide a session prior. SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, said its holdings decreased -0.40% on Wednesday to 796.96 tonnes, from 800.20 tonnes on Tuesday. In key economic news, China's Central Bank will fine-tune monetary policy in a "pre-emptive" attempt to make sure liquidity remains ample amid a spike in trade tension with the United States.