The market mood is on the defensive today as investors are keeping their eyes on more tariff news before the weekend. After the bounce in the last two days, the S&P 500 turned flat on the week but the drop suggested by futures at the moment threatens to undo all of that. Risk sentiment soured after Trump's announcement of 35% tariffs against Canada earlier in the day here, adding that countries with no letters are going to get blanket tariffs of between 15% to 20%.
S&P 500 futures fell by 0.7% on the headlines before paring those losses to around 0.2% earlier. But as we look to US trading now, futures are back down by 0.6% and even briefly taking out the early low.
So, what's next?
I would argue it all circles back to the same predicament with the dollar here, that being mostly an argument about Trump's actions and what is priced in.
The market continues to believe in the TACO trade but at some point, we'll have to face the reality of Trump finally sealing some trade deals. And if that is to be on 1 August, can traders and investors swallow the prospects of the tariffs we're seeing? Or if it all already is priced in, is a potential correction on the cards after?
This article was written by Justin Low at www.forexlive.com. Read More Details
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