After the sharp sell-off we saw earlier in the week, markets took a little break from the selling, but there is still much uncertainty about how the rest of the week will play out.

The major US indices closed out the session, modestly lower, but sold into the close, which is often a sign of weakness.

The worry is that Trump’s tariffs hikes will go into effect this weekend and increase the current levels of tension between the two countries.

However, Goldman Sachs noted that the probability that the US will impose new tariffs on Chinese goods this week was now around 60 per cent.

Chinese vice-premier Liu He will be in Washington for two days of talks starting tomorrow and that suggests there is some chance the new tariffs will be avoided.

The USD remains relatively strong for the time being and is still trading below the key 98.00 level for the time being.

Asian Session

The main data point of note for today is out of China, where we will get both CPI and PPI.

Both the AUD/USD and NZD/USD will be on watch today. After the RBNZ cut official rates yesterday and the Aussie slid back below the 0.7000 mark after spiking sharply higher when the RBA kept rates on hold on Tuesday.