Talking Points:

  • Asian stocks were mixed Monday
  • Hong Kong, Sydney and Auckland were out of the game for Easter holidays
  • The US Dollar was steady despite some mixed local data

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Holiday-thinned markets took the imposition of Chinese tariffs on US imports in their stride Monday as the move was not unexpected.

The administration of US President Donald Trump has already imposed trade barriers on Chinese metals, and news that Beijing was doing the same on 128 different US goods was merely the implementation of a measure already announced. However there are clearly some hopes in the market still that full-blown trade conflict will yet be avoided.

The Easter Monday break saw markets in Australia, Hong Kong and New Zealand off the grid. But the Nikkei fell by 0.3%, with the Kospi down 0.1% and stocks in mainland China just slightly higher into their closes.

Japanese business confidence came in below expectations according to the Bank of Japan’s Tankan survey, but it remained elevated by recent standards and the poll was by no means universally off target. The Australian Dollar took a small knock when the Caixin Purchasing Managers Index for China’s private sector manufacturers also underwhelmed, but a stronger official PMI released over the weekend limited the damage.

Holidays reduced foreign exchange trading appetite in Asia, perhaps unsurprisingly as all major European centres will also be closed Monday. The Japanese Yen was steady against the greenback, however.

The Australian Dollar seems to be forming another lower high on its daily technical chart, but given the holiday, and quarter-end flows, it may make sense to keep an eye on this trend for a day or two yet.

Asia Stocks Mixed Despite China Tariffs, Holidays Thin FX Trade

Gold prices got a boost from those rising US/China trade tensions while crude oil prices were up on a reported fall in US exploration activity.

Still to come Monday are Canada’s manufacturing PMI and the similar US release from the Institute for Supply Management.

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--- Written by David Cottle, DailyFX Research

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