It was choppy trading last night again.

At the official close on Wall Street last night, the major indices finished higher, but in after-hours trading President Trump threatened additional tariffs on China, and that sent the US index futures lower. Mr Trump warned that the US may impose new levies on $100 billion worth of goods, and traders are fearful about the prospect of a full-blown trade war.

The latest trade figures from the US showed the budget deficit at its widest in over nine years, so there clearly is an imbalance when it comes to international trade.

The clock is now ticking for the US and China to rearrange their trading relationship, and some traders are optimistic that improvements will be made before China actually starts imposing the latest batch of tariffs.

The fact that Boeing and Deere shares closed in positive territory last night is a good indication that dealers aren’t too fearful about an economic conflict. Those stocks were among the worst hit when Beijing revealed their new list of tariffs. Perhaps traders are getting used to President Trump’s ways, and are starting to look at this entire ordeal as a way to rebalance the relationship, rather than spark a global trade war.

At 1.30pm (UK time) the US will reveal the latest non-farm payrolls report, and economists are expecting 190,000 jobs to have been added in March, compared to the 313,000 that were added in February. The unemployment rate is tipped to fall to 4% from 4.1%. On a yearly basis, average earnings are expected to increase by 2.7%, and on a month-on-month basis dealers are predicting an increase of 0.2%.

When it comes to the US jobs report, the devil is in the detail, and the market can often put too much stock in the headline number, when in fact revisions to previous reports or the wage data can actually be the main driver of the markets in the wake of the release. Earlier in the week, the ADP private sector employment report was strong, while the initial jobless claims figure ticked up. Traders remain undecided as to whether the Federal Reserve will hike interest rates two or three more times this year. For the time being, the Fed seems to be unfazed by the economic standoff with China, and they feel they should base their decisions on the economic data. In the near-term, traders will have to take the Fed’s word, but should the economic conflict escalate, it could derail their plans.

EUR/USD – has been edging lower for over a week and if there is a break below 1.2239, it could bring 1.2154 into play. If the market resumes its wider upward trend it could target 1.2476 or 1.2500.

GBP/USD – continues in the same upward trend that it has been in over the past year, and should the rally continue, it could target 1.4244. While a pullback may find support in the 1.3900 region.

EUR/GBP – has been losing ground for nearly a month, and while it remains below the 0.8800 mark, the bearish move is likely to continue. Support might come into play at 0.8667. A break above 0.8800 might put 0.8890 (the 200-day moving average) on the radar. 

USD/JPY – has been in a downward trend since November, and if the bearish moves continues it could target 104.63. Rallies may encounter resistance at 108.00 or 109.78.

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