Summary: President Trump yesterday confirmed that tariffs would be imposed on Canada and Mexico last week, and announced new restrictions on China, sending global stock markets and risky assets firmly lower.

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1. Markets have moved into a pronounced risk-off mode following statements by President Trump a few hours ago which:
   1. Confirmed that 25% tariffs would be imposed on imports from Canada and Mexico starting next week.
   2. Announced new restrictions on Chinese investment, which hit Asian stock markets hard, producing the biggest one day drop seen in three weeks.
2. Markets were already shaky but these pronouncements from Trump have produced a major chill, and market sentiment is clear – which means it is likely to be a good day to make money in the market. Interestingly, the Canadian Dollar and Mexican Peso have responded little to the news, but stock markets are lower, with an especially strong fall in the NASDAQ 100 Index.
3. Bitcoin is reacting very negatively to the risk-off environment, breaking below the round number at $90,000 to trade at its lowest price in three months. These are bearish signs for Bitcoin.
4. Japanese economic data continues to support the case for further rate hikes, which will likely strengthen the Japanese Yen over coming weeks and months as it diverges with the more dovish monetary policy seen at most G7 central banks. Inflation in Tokyo has risen to an annualized rate of 3.4% which suggests a national rate of 3.2% and is easily a sufficiently high rate to justify further interest rate hikes. This could send the USD/JPY currency pair lower, having already reached multi-month lows, but the risk-off environment has boosted the USD, so Yen crosses may be better vehicles for this trade.
5. In the Forex market, the Japanese Yen has been the strongest major currency since today’s Tokyo open, while the Australian Dollar has been the strongest major currency, putting the AUD/JPY currency cross in focus. This is a typical setup for a risk-off market.
6. Gold is holding up quite well after reaching a new all-time high yesterday above $2,956.
7. There will be a release of Australian CPI (inflation) data tomorrow. It is widely expected to rise from an annualized rate of 2.5% to 2.6%.

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