USD/JPY plummets to ten-day lows below 106 as Trump goes berserk on Twitter
|- Trump says he will respond to China’s tariffs this afternoon.
- Escalating trade tensions trigger fresh risk-off flows on Friday.
- US Dollar Index drops below 98, 10-year US T-bond yield falls nearly 5%.
The USD/JPY came under strong selling pressure in the last hour and erased nearly 100 pips as US President Donald Trump's latest rant on Twitter forced investors to seek refuge and ramped up the demand for safe-haven JPY. As of writing, the pair was trading at its lowest level in ten days at 105.60, erasing 0.78% on a daily basis.
Trump to respond to China's tariffs
Earlier today, China announced that they will be imposing tariffs on $75 billion worth of US goods as a retaliatory measure. "New tariff rates will apply to about $75 billion worth of US goods," China explained. Although this development weighed on the market sentiment and force the 10-year US T-bond yield to erase all of its daily gains and fall into the negative territory, the market reaction was relatively soft when compared to the wild swings witnessed in risk-sensitive assets in the last hour.
Responding to China's announcement, US President Donald Trump said that they don't need China and that they would be "far better off" without China. "I will be responding to China’s tariffs this afternoon. This is a great opportunity for the United States," Trump tweeted out to revive concerns over a prolonged trade conflict.
The US Treasury bond yields fell sharply on Trump's comments and the 10-year reference was last down 4.5% on the day. Furthermore, Wall Street's main indexes are now all losing more than 1% to confirm the risk-off atmosphere. The US Dollar Index is now losing 0.5% on the day at 97.73.
In the meantime, in his prepared remarks delivered at the Jackson Hole Symposium today, FOMC Chairman Powell refrained from providing any fresh insights into the Fed's next policy move as he said that the economy was in a favourable place but added that the Fed will act 'as appropriate'
Technical levels to watch for
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.