It’s an Asia risk-off day as traders turn to Beijing’s response to US President Donald Trump’s sweeping mutual tariffs on China and other Asian countries.
On Wednesday, Trump announced mutual tariffs on imports from 180 countries, including higher taxes on trading partners identified as the worst offenders, such as China and the European Union.
Trump has imposed a new 34% tariff on goods from China, in addition to the existing 20% tax, bringing the highest collection in every country to 54%. Meanwhile, the latest action had no impact on Canada or Mexico.
Observers say the ball is currently in the Chinese court and the nature of retaliation can determine market responses.
“At the moment, everything depends on China. If China underestimates the yuan in response to today’s large additional US tariffs, it will cause a global risk-off that will hit EMS first.
Earlier on Thursday, Beijing urged the US to immediately vow retaliation while lifting tariffs. Meanwhile, the Chinese Yuan fell to seven yuan/USD for seven weeks, along with losses in Asian stocks and an imminent death cross in Bitcoin (BTC).
Depreciating Ewan, which makes international goods more attractive in the international market, is one way to combat Trump’s tariffs. That said, as observed in 2015 and 2018, it could spell trouble for carry (currency) trading and scary financial markets.
Moreover, potential interventions by the People’s Bank of China (PBOC) can stop the rapid original decline due to mistakenly weighting risk assets, including inventory and cryptocurrency.
It is no coincidence that Asian stocks traded in red at the time of press. Japan’s Nikkei has reached an eight-month low. US stock futures fell by more than 2%, pointing to risk-off mode.
Bitcoin (BTC), a leading market value cryptocurrency, which fell from $88,000 to $82,500 following Trump’s tariff announcement, traded at nearly $83,300, at close to $83,300, according to data from Coindesk Market.
A simple 50-day moving average (SMA) of cryptocurrency spot prices appears on a trajectory below the 200-day SMA, confirming what is known as the bearish technical pattern of “Death Cross.”
There is a complex record of predicting price trends, but the latest cross to escalating trade emergency tensions is taking note, as options pricing shows biases in expiration at the end of June.
