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Dollar spooked as China strikes back on.......>

FOREX
FOREX: Dollar spooked as China strikes back on Trump tariffs
-USD and commodity currencies were knocked back after the Chinese foreign
ministry announced a reciprocal set of tariffs targeting $50bln on US exports to
China ranging from soybeans to aircraft to tobacco. After touching lows of
$1.2257, EUR/USD rallied over 50 pips to top $1.23 ahead of the NY crossover as
the dollar followed US equity futures lower, which indicate an open below the
200DMA for the S&P500.
-JPY is the strongest currency in G10 FX space, sitting higher by over 0.5%
against both the AUD and CAD as equities trade weaker across Europe and the US.
Implied vol markets also rising across tenors for USD/JPY.
-Options volumes look healthy this morning with USDCAD the real standout given
the move below C$1.28 in spot. Some larger options trades with strikes down at
C$1.23 (expiring May16) traded overnight, signalling a market that holds a great
interest in a stronger CAD.
-Eurozone CPI, US ADP & comments from Fed's Mester (Voter) & Bullard (Non-Voter)
headline on Wednesday.

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