Trade war back in the forefront ahead of the Fed meeting and the all-important nonfarm payrolls

Trade war back in the forefront ahead of the Fed meeting and the all-important nonfarm payrolls

Trump threatened for heavier tariffs in an attempt to bring China back to the negotiation table. Trump’s comments came after the market got rested that the US and China are trying to restart trade talks. The US Treasury representative and the Chinese Deputy Prime Minister are already holding a series of meetings to discuss the revival of the negotiations and Trump’s move probably aimed to raise pressure on Beijing.

As for the policy meeting this week, the Fed is expected to keep its policy unchanged. First, there have been no economic changes claiming adjustments to the existing monetary policy. And second, we rarely see significant changes in meetings that are not followed by a press conference. I think the Fed will keep its policy unchanged and the persistence of good economic data will more conclusively put on the table two more rate hikes by the Fed in 2018, and Trump’s threats will remain just an attempt to limit the Dollar rise.

Also we have not to forget the jobs data on Friday, with analysts projecting the addition of 190k new positions, and a decrease of the unemployment rate towards 3.9%. Any reading less than 150k new positions will have a very negative impact on the greenback.