The trade war just got real, but the markets are limiting their reaction. The dollar is mixed across the board and economic data is light today.

The trade war is on

The U.S. officially announced that a 10% tariff on $200 billion in Chinese goods will start next week, with the rate jumping to 25% in January 2019.

China has already said it will retaliate, with 5% to 10% tariffs on $60 billion in U.S. goods effective Sept. 24.

In his statement Monday, President Trump said that the U.S. would pursue tariffs on $267 billion Chinese imports if China retaliates.

The market reaction is relatively calm considering this is the biggest escalation we’ve seen in about a month. Normally, the dollar would get a boost off of this kind of news, benefiting from uncertainty and a risk-off mood in the market. But, perhaps, investors are growing tired of the back and forth. Alternatively, most were preparing themselves for 25% and now have a few months until it gets to that point.

EUR/USD broke above 1.17 Tuesday morning after failing to do so Monday. A speech by ECB President Mario Draghi Tuesday morning in Paris didn’t produce any market moving commentary.

While the dollar is down against the euro, it’s up against the safe-haven Japanese yen. USD/JPY is hitting 112.2.

Sterling up ahead of Wednesday data

The pound briefly gave back some gains to the dollar as Brexit uncertainty weighed it down. GBP/USD dipped to 1.313 before climbing back up to 1.316.

However, sterling is benefitting from the dollar’s weakness and limited market reaction to varying Brexit viewpoints.

On Wednesday, a series of U.K. data points could impact the pair. The retail price index, producer price index and consumer price index are all due around 4:30 a.m. EST. The CPI will be the most impactful. It’s expected to slow slightly for August compared to July.

Oil prices jump

Saudi Arabia said it was comfortable with Brent oil above $80 per barrel and markets took that as a challenge.

West Texas Intermediate jumped 1.5% to $69.8 per barrel and Brent is reached above $79 before dropping slightly.

USD/CAD dropped below 1.30 and now hovers around 1.301.