Dismal Philly Fed survey spooks US markets

The Philadelphia Fed Manufacturing Survey was extra-ugly, falling 4.1 rather than rising 14.0 as expected. It was the first negative reading since May 2016. Initial Jobless Claims was the bright spot, dropping to 216,000 from 229,000 the week before.

It isn’t any wonder why FX and equity traders are staying close to home, as there is plenty of event risk in addition to flip-flopping central bank policies. China and the US are reportedly working on “memorandums of understanding” as the framework for a trade deal. The talks continue on Friday and could lead to President Trump delaying the March 1 tariff increase. On the other hand, traders may be leery about China’s trade policies after Beijing was incensed by Australia’s cyber-security concerns and visa issues for a Chinese businessman and quickly banned Australia coal imports.

USDCAD traders would be wise to take note as China is furious with Canada over its arrest of Huawei CFO Meng Wanshou. 

Eurozone trade issues are sure to cause a kerfuffle as there are reports that President Trump has what he needs to impose tariffs on the import of EU cars. A “no-deal Brexit is another issue. The risk of GBPUSD instability could trigger a massive shift into risk aversion trades, and so could escalating Russia/US tensions over missile deployments.