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. 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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