US to Impose 100% Tariff on Semiconductor Imports, Apple’s $100B Investment Plan

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3620-1.3860

Euro                 1.5880-1.6130

Sterling            1.8300-1.8560

WTI Oil (opening level) $64.71

The CAD/USD is opening at 1.3742 ( 0.7277 )

USD/CAD has given back about half of its late July rally and spot is steadying around the 50% Fibonacci retracement support at 1.3728 in early trade. Early price action suggests spot losses may steady around this point in the short run. Friday’s big, USD-bearish reversal in price action suggests more downside movement remains possible, if not likely, however. Intraday resistance is 1.3775

Headlines

·    Trump announced plans for a 100% tariff on semiconductor imports unless companies commit to moving their chip production to the US. The announcement was made with Apple CEO Tim Cook at Trump’s side. Cook revealed the intention by Apple to invest USD 100 billion in US-based manufacturing.

·    The White House announced an additional 25% tariff on Indian imports due to India's importing of russian oi, doubling U.S. levies on India to 50%. Trump stated this in an executive order. The tariffs start in 21 days, with an initial 25% tariff beginning Thursday. This action signals Trump's stance against nations purchasing russian oil amid the Ukraine conflict. India called the tariffs “extremely unfortunate,” citing similar actions by other countries.

·    Trump announced he'll nominate a replacement for Fed Governor Adriana Kugler by week's end and has four finalists for Fed Chair Jerome Powell's successor. Market expectations for a September rate cut have risen to 90% due to soft economic data, including stagnant services, weak hiring and rising prices from the latest ISM report, and just 73K payrolls added in July, indicating a labor market slowdown.

·    The US dollar and Japanese yen weakened yesterday, with the Euro the strongest G10 currency. EURUSD pulled above 1.1670 overnight and EURJPY teased above 172.00 at times,

·    The Bank of England meeting today is expected to bring a 25 basis rate cut, and many will look closely at the bank’s plans for altering its pace of QT, or bond sales, for signs of an intent to slow the pace at which it sells gilts into the market (a dovish move). Sterling is on the defensive versus a strong euro as it trades at local resistance at 0.8735 this morning, while it has rebounded smartly versus the weak USD over the last few sessions, posting a new 6-day high above 1.3370 overnight.

Key Points

·    Equities: Apple lifts Nasdaq; pharma stocks slump in Europe; BoE rate cut in focus

·    Volatility: VIX drops to 16.77; SPX expected move ±29.5 points; options signal calm

·    Digital assets: ETHA +3%; IBIT +1.4%; BTC steady; crypto miners rebound

·    Fixed Income: Weak US 10-year treasury, but yields remain tame, reversing small surge

·    Currencies: USD and JPY weak as EURUSD rises back above 1.1650

·    Commodities: Crude oil prices crushed lower. Gold quiet in very narrow range. Silver rebound continues.