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Trump attacks China for attacking farmers, ranchers and industrial works "because of their loyalty to me".  Civilians loyal to a leader? Sounds like it's word out of the mouth of a dictator in an authoritarian country!

From Oxford dictionary - Patriot: A person who vigorously supports their country and is prepared to defend it against enemies or detractors.

Patriots are loyal to their country, not a person. A democratically elected president has to be loyal to the citizens. Not the reverse.

https://twitter.com/realDonaldTrump/status/1042033116695670786

https://twitter.com/realDonaldTrump/status/1042034269374361600

China formally announced its retaliation tariffs, in response to the tariffs on USD 200B in Chinese imports announced by USTR yesterday. In short, the tariffs will be effective at 12:01 local time on September 24. Total amount of American good involved values at USD 60B, Tariff rates are at 5% and 10%, much lower than prior proposed 5-25%.

China's announce was made through the Ministry of Finance. 2493 lines of products in Annex 1 and 1078 lines of products in Annex 2 will be subject to 10% tariffs. 974 lines in Annex 3 and 662 lines in Annex 4 will be charged 5% tariffs.

Statement in simplified Chinese here.

Separately, China has also filed another complaint to the WTO regarding the new US tariffs.

Yesterday, the USTR announced 10% tariffs on USD 200B of Chinese imports, effect September 24, 2018. Starting January 1, 2019, the tariff rate will be increased to 25%.

Canadian manufacturing sales posted a 0.9% increase in July, following last month's upwardly revised 1.3% (previously reported as +1.1%). The release comes above expectations of a 0.6% movement. After accounting for price changes, volumes were up an even more impressive 1%.

Durable goods moved up 0.5%, where strong gains in the transportation equipment sector (2.6%) accounted for a large portion of the increases in the headline number. This was slightly offset by declines in primary and fabricated metal product shipments (-1.1% and -2%, respectively). Non-durable goods increased 1.4% on account of increases in chemicals (4.6%) and petroleum and coal products shipments (2.4%).

Regionally, the increases were centered in Ontario (2.1%), Alberta (1.7%) and Nova Scotia (8.7%). The remaining seven provinces saw declines on the month.

Inventories increased 1.2%, continuing their upward trend, whereas the inventory-to-sales ratio remained unchanged at 1.41. Forward looking indicators were not as bright, with new orders down 1.8% and unfilled orders unchanged relative to last month.

Key Implications

Today's report was a solid one for Canada's manufacturing sector and starts the third quarter on strong footing. The impressive pickup in motor vehicle sales more than offset the modest declines in primary and fabricated metal shipments, that were likely due to steel and aluminum tariffs.

Looking ahead, the positive release sets the stage for a decent third quarter and adds some upside risk to our real GDP forecast of 2.2%. Barring any material surprises in retail sales or inflation data releases later this week, today's number adds further credence to the expectation that the Bank of Canada will hike rates in October.

The pair entered US session fully in red as the greenback came under increased pressure after China announced new tariffs on US goods, in response to US tariff decision, announced earlier today. Fresh weakness has almost fully retraced gains of past two days and pressures higher base at 1.2980 zone (lows of last week / triple downside rejection). Fresh bearish sentiment favors break below 1.2980 to expose weekly cloud top (1.2927) and open way for full retracement of 1.2887/1.3226 upleg. Daily MA's in full bearish configuration and weakening momentum support bearish scenario.

Res: 1.3016; 1.3064; 1.3096; 1.3121
Sup: 1.2980; 1.2963; 1.2927; 1.2887

Highlights:

• Manufacturing sales rose 0.9% in July — 1.0% excluding the impact of prices
• Looking through monthly volatility, overall sale volumes were still up 4.4% from a year ago reflecting relatively broadly-based gains.
• The details of the monthly sales data are consistent with an increase in manufacturing output (i.e. the manufacturing component of monthly GDP) of about 0.8% in July. We, however, expect a large transitory shutdown in the oil sands will prevent an overall GDP increase in the month.

Our Take:

Nominal manufacturing sales rose 0.9% in July, and a slightly stronger 1.0% excluding the impact of prices. The data is volatile on a month-over-month basis but the volume increase was the third straight and pushed the year-over-year rate of growth up to 4.4%. Higher sales of motor vehicles and parts accounted for about a third of the headline volumes month-over-month gain with activity continuing to strengthen after transitory factory shutdowns caused declines in May. A big jump in the often-volatile railroad stock component also contributed to a 2.9% jump in transportation sale volumes and chemical sale volumes bounced back 5.0% after falling 7.6% in June.

Concerns about potential trade disruptions with the U.S. remain but, for now, the Canadian manufacturing sector seems to be doing a little better. That is less surprising given a significant pickup in growth in the U.S. industrial sector, which remains a key customer for Canadian manufacturers. We expect a big transitory drop in oil sands output related to a temporary production disruption will prevent an increase in overall GDP in July but that weakness will reverse in coming months. Absent a more fundamental shock to the economy, the broader underlying economic backdrop still looks firm and strong enough to warrant further gradual Bank of Canada interest rate hikes.

Markets

Global core bonds lost slightly more ground today. Markets reacted stoical to US President Trump’s new tariffs on Chinese goods. The move was largely discounted and investors perhaps think of it as the US’s final move against China. US Treasuries underperform German Bunds with the US 10-yr yield and 30-yr yields again testing first resistance around respectively 3% and 3.15%. Today’s session was poor from an eco/event point of view. Brent crude prices increased from $77.5/barrel to $79/barrel on reports that Saudi Arabia is comfortable with oil prices above $80/barrel. The US yield curve bear steepens with yields 0.5 bps (2-yr) to 3 bps (30-yr) higher. German yields add 0.5 bps (2-yr) to 1.2 bps (30-yr). 10-yr yield spread changes vs Germany are narrowly mixed with Greece underperforming (+7 bps) and Italy outperforming (-3 bps).

Today, USD traders didn’t know which card to play after the US decision to impose a 10% tariff on an additional $200bn of Chinese imports. The reaction on Asian (equity and FX) markets was modest. The dollar hardly gained any ground on this ‘escalation’ in conflict. Early in European dealings EUR/USD even tried to continue yesterday’s intraday rebound. The pair came close to close to Monday’s top, but a real test of the 1.1733 resistance again didn’t occur. A remarkable rally of European equities at the start of the session also did run into resistance. Markets awaited more indications on the nature of Chinese retaliation and also looked forward to the market reaction in the US. EUR/USD settled again in a tight range in the high 1.16 area. US equity futures/equities show a similar cautious/moderate trading pattern. The dollar came slightly under pressure again this afternoon. EUR/USD is again testing this week’s top (1.1720 area). USD/JPY still hovers near the 112 pivot. So, relative USD softness and comparable tentative euro resilience continues today.

There were no important data in the UK today and there was also no important news from Brexit. The internal debate within the UKL conservative party on what kind of Brexit the party/the country should aim for, continues. However, there were really no elements today. Markets look forward to the informal EU summit in Salzburg tomorrow and on Thursday. EUR/GBP traded with a slight upward bias (currently 0.89 area).

News Headlines

Italy’s Deputy PM Di Maio, from the ruling 5-Star Movement party, said Italy’s Economy Minister Giovanni Tria could be fired if he refuses to get on board with the plan to provide basic income for the poor. Tria, on his part, repeated that Italy will obey the 3%-rule stated by EU law and aims to address the country’s social needs.

UK Brexit minister Raab said that he rejects EU negotiator Michel Barnier’s proposal for the Irish border. Barnier stated that the EU saw technical checks on board vessels or in ports outside Ireland as a possible solution. Raab now said that this is not an option and repeated that the UK is sticking to its plans for a post-Brexit border.

The Chinese commerce ministry made a statement today that China will retaliate after the US announced it will impose 10% tariffs on $200bn of imports from China. It filed an official complaint with the WTO and will impose tariffs on $60bn of US imports that range between 5% and 10%. They’ll be effective on Sept. 24 as well.

Daily Pivots: (S1) 1.3091; (P) 1.3128; (R1) 1.3197; More...

100% projection of 1.2661 to 1.3042 from 1.2784 at 1.3165 is finally met and there is no sign of topping yet. Intraday bias stays on the upside for further rally. But as rise from 1.2661 is seen as a corrective move, upside should be limited by 1.3316 key fibonacci level to bring near term reversal. On the downside, break of 1.3042 resistance turn support will argue that rebound from 1.2661 might be completed. In such case, intraday bias will be turned back to the downside for 1.2784 support to confirm.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA (now at 1.4062). The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

Daily Pivots: (S1) 111.70; (P) 111.92; (R1) 112.07; More...

USD/JPY's rally is still in progress for 100% projection of 109.76 to 111.82 from 110.37 at 112.43 first. Break will target a test on 113.17 high. On the downside, break of 111.65 will turn intraday bias neutral again. But overall, further rise is expected as long as 110.37 support holds.

In the bigger picture, corrective fall from 118.65 (2016 high) should have completed with three waves down to 104.62. Decisive break of 114.73 resistance will likely resume whole rally from 98.97 (2016 low) to 100% projection of 98.97 to 118.65 from 104.62 at 124.30, which is reasonably close to 125.85 (2015 high). This will stay as the preferred case as long as 109.36 support holds. However, decisive break of 109.36 will mix up the outlook again. And deeper fall should be seen back to 61.8% retracement of 104.62 to 113.17 at 107.88 and below.

Daily Pivots: (S1) 0.9647; (P) 0.9662; (R1) 0.9689; More.....

USD/CHF's decline is still in progress and reaches as low as 0.9599 so far. Intraday bias stays on the downside. Current fall from 1.0067 should target 0.9523 fibonacci level next. On the upside, break of 0.9633 minor resistance will turn intraday bias neutral again. But near term outlook will stay bearish as long as 0.9757 resistance holds.

In the bigger picture, rise from 0.9186 low has completed at 1.0067, after failing to sustain above 1.0037 resistance. Fall from 1.0067 could extend to 61.8% retracement of 0.9816 to 1.0067 at 0.9523 and below. But for now, we don't expect a break of 0.9186 low. On the upside, firm break of 0.9866 support turned resistance will suggests that fall from 1.0067 has completed and rise from 0.9186 is resuming.

West Texas Intermediate (WTI) crude oil futures traded sharply higher today after the bounce off the 68.50 resistance level, which overlaps with the 38.2% Fibonacci retracement level of the downleg from 75.24 to 64.40. However, oil prices have been developing within a sideways range with the 69.80 resistance level as an upper boundary and lower boundary the 68.50 support.

In the short-term, the RSI indicator is pointing upwards in the positive zone, while the blue %K line of the stochastic oscillator posted a bullish cross with the red %D line, signaling upside tendency in the 4-hour chart.

An extension to the upside and above the 69.80 resistance area could meet the 61.8% Fibonacci of 71.09. Further up, resistance could be found at 71.40, identified by the high on September 4. However, the short-term neutral would change only if the price climbs above the aforementioned obstacle.

If the price weakens and slips below the moving averages and the 68.50 support barrier, it could move towards the 23.6% Fibonacci, which coincides with the 66.95 hurdle. Even lower, the 65.70 support level could attract greater attention as any leg below the diagonal line could create a bearish outlook, opening the way towards the 64.40 barrier.

To summarize, WTI crude looks neutral in the short-term, while in the long-term picture, it has been bullish since June 2016.