It’s an Asia risk-off day as traders turn to Beijing’s response to US President Donald Trump’s sweeping mutual tariffs on China and other Asian countries.
On Wednesday, Trump announced tariffs on imports from 180 countries, including trading partners identified as the worst offenders, including China and the European Union.
The President has imposed a new 34% tariff on goods from China, in addition to the existing 20% tax, bringing the highest collection in every country to 54%. This behavior had no effect on Canada or Mexico.
Observers say the ball is currently in the Chinese court and the nature of retaliation can determine market responses.
“At the moment, everything depends on China. If China underestimates the yuan in response to today’s large additional US tariffs, it will cause a global risk-off that will hit EMS first.
Earlier on Thursday, China urged the US to lift tariffs and vowed immediate retaliation. Meanwhile, the yuan weakened to a seven-week low against the dollar, along with a cross of Asian stock losses and an imminent death in Bitcoin (BTC).
Depreciating Yuan, which makes international goods cheaper on international markets, is one way to combat tariffs. That said, as observed in 2015 and 2018, it could spell trouble for carry (currency) trading and scary financial markets.
Additionally, potential interventions by the People’s Bank of China (PBOC) can stop the rapid yuan decline, and increase the dollar by mistake by accidentally weighting risky assets, including stocks and cryptocurrencies.
It is no coincidence that Asian stocks traded in red at the time of press. Japan’s Nikkei has reached an eight-month low. US stock futures fell by more than 2%, pointing to risk-off mode.
Bitcoin, the leading market-valued cryptocurrency traded for nearly $83,300 following Trump’s tariff announcement, has traded nearly $83,300, nearly $83,300, according to data from Coindesk Market.
A simple 50-day moving average (SMA) of cryptocurrency spot prices appears on a trajectory below the 200-day SMA, confirming what is known as the bearish technical pattern of “Death Cross.”
There is a complicated record of predicting price trends, but the latest cross, which is in the background of emergency trade tensions, is taking note, as options pricing now shows price or negative side protection, according to Deribit and Amberdata.