Trump tariffs remain in focus as the countdown continues

After being gripped by fear, dip buyers managed to wrestle back some optimism in trading yesterday. Tech shares lagged but it was definitely a win even if the Nasdaq closed down by just 0.1%. Meanwhile, the S&P 500 caught a bounce once again following a brief test under the 5,500 level. Is it just month-end and quarter-end closing though? We’ll get a better sense of that later today.

As we look to the day ahead, we will have some key economic data releases to work through. In Europe, there’s the Eurozone CPI report before we move on to US where we will get the ISM manufacturing PMI and JOLTS job openings.

But all of this won’t steal the spotlight away from the main event this week, that being Trump’s trade policy and tariffs announcement tomorrow. He has talked up a big game in calling it Liberation Day. So, we’ll see if he will walk the talk when the time comes.

For the time being, everything and anything might still be up in the air. A report over the weekend suggested he might not take on a targeted approach on tariffs. But then yesterday, he said that they are going to “be nice” and that we might get some idea on his plans later today or definitely tomorrow.

• Trump says ‘going to be nice’ on tariffs
• Reports that Trump won’t decide on tariffs until the morning of April 2

It’s a tricky one but unless he really burns the world down, I think markets will somehow survive the big test this week.

The real question then turns to: Is the tariffs narrative going to turn into a sell the rally play instead of buying the dip moving forward?

There’s going to be many more months of this to sort through, especially the impact on the global economy and how it may impact the outlook for major central banks as well.

You can bet that this won’t be the end of Trump’s tariffs threats and as long as there is this complication and uncertainty for markets to deal with, it will be difficult to sustain any optimism for a decent period. I would argue that’s the real risk that markets should be looking at, and not if this week is the be-all, end-all for risk trades.

This article was written by Justin Low at www.forexlive.com.