ForexLive APac FX news wrap: Trump 104% China tariff looms; AUD & NZD hit multi-year lows

• Risk sentiment to stay weak in near term; yen may strengthen further
• Wall Street Journal’s Timiraos on the Federal Reserve: “They are in a no-win situation”
• Reserve Bank of New Zealand cuts rate by 25bp, as widely expected
• ex-JPMorgan’s Kolanovic: Market turmoil unprecedented, Fed response unusually muted
• Counting down, less than 3 hours to go: US Imports from China face 104% tariff at midnight
• PBOC sets USD/ CNY reference rate for today at 7.2066 (vs. estimate at 7.3348)
• Japan Kato: Won’t sell us Treasury holdings just from standpoint of US-Japan relations
• Trump says China is manipulating yuan to offset against tariffs
• Bank of Japan Governor Ueda scrutinizing US tariff impact on Japan
• Expectations are for another very heavy dampening of USD/CNY reference rate again today
• Foreign aid. Trump can be pig-headed stubborn, is there a sign he’ll soon bend on tariffs?
• Goldman Sachs say escalating US-China tariff tensions a downside risk to economic growth
• South Korea announces emergency measures for auto industry
• Fitch downgrades six Chinese banks
• Trump administration has moved to restore some terminated foreign aid programs
• Stock Market Forecast: Impact of Tariffs and Future Trends
• BMO: Tariff escalation means too early to call a ‘risk’ bottom
• Fitch Ratings warns US tariffs may temporarily trim deficit but deliver dire consequences
• Forexlive Americas FX news wrap: Hope for a tariff deal dwindles, yuan hits record low
• Trade ideas thread – Wednesday, 9 April, insightful charts, technical analysis, ideas
• Oil – private survey of inventory shows a headline crude oil draw

Markets are bracing for the impact of Trump’s sweeping 104% tariffs on Chinese imports, which are set to take effect at 12:01 a.m. Wednesday US Eastern time—just minutes away. Earlier hopes for a last-minute phone call from Beijing to delay implementation faded as the deadline approached, assuming there was ever a serious prospect for such a move.

US equity index futures declined sharply, falling as much as 2% before stabilising. The Australian and New Zealand dollars were also hit, each dropping to their lowest levels since 2020 amid rising geopolitical and trade tensions.

Adding to the tariff narrative, Trump signalled that his long-promised tariff on pharmaceutical drugs would be “major” and is expected to be announced “very shortly.”

In Japan, Bank of Japan Governor Kazuo Ueda struck a cautious tone, saying the central bank remains in wait-and-see mode to assess the broader impact of the tariffs. Meanwhile, Japanese officials are reportedly heading to Washington for direct talks on trade measures.

All eyes were also on the People’s Bank of China’s daily USD/CNY reference rate, with the central bank guiding the onshore yuan lower to its weakest level since September 11, 2023. The Bank has been allowing the onshore yuan to drip lower over past days.

Elsewhere, the Reserve Bank of New Zealand cut its official cash rate by 25 basis points, in line with expectations. In the FX space, EUR/USD climbed to briefly trade above 1.1040, while AUD and NZD rebounded from their earlier lows. GBP/USD also advanced. USD/JPY dipped below 145.25 before recovering back above 145.90.

US
yields continued their climb.

Regional equities remainder under pressure.

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After midnight (US time) CNH is likely to see pressure again:

This article was written by Eamonn Sheridan at www.forexlive.com.