Though US markets were closed yesterday in observance of the Memorial Day holiday, international markets were open for business, and the Dollar moved with that.
Overview
In thin flows yesterday, the Buck lost ground across this morning, but has rebounded today to trade close to Friday’s closing levels across most major currencies. Emerging-market assets are dropping following this morning’s rebound for USD, but risk-averse currencies like CHF and JPY are also dropping. The Dollar’s action today is in conjunction with US equities, set to open higher this morning.
The biggest weekend news once again came out of the White House on the subject of trade negotiations, after President Donald Trump announced his proposed 50% tariffs on the European Union would be delayed until July 9th from June 1st. Trump, following a “very nice call” with European Commission president Ursula von der Leyen, said that the bloc is now ready to come to the table for real negotiations after expressing his displeasure with progress in talks to reporters toward the end of last week. Though this walkback was welcome news for markets, many strategists have noted that this only injects further and continued uncertainty into the global trade picture over the next month. July 9th is also quite close to when the Trump administration’s 90-day pause on reciprocal tariffs, announced April 2nd, will expire, setting the stage for volatile trading in late June and early July. Bond yields around the world are also in focus this morning, following a report that Japan’s finance ministry has sought input from market participants on appropriate levels of debt issuance, on the heels of a dismal week for government bonds globally. Japanese bonds are rallying on the heels of this report, and US Treasuries are following suit.
This morning, the US released durable goods orders for April, showing a sharp decline following March’s sharp increase. Though the response in the Buck is minimal to such figures, this helps further paint the narrative that many market participants stocked up on inventory in March before the implementation of reciprocal tariffs around the world. The end of the month is set to bring a busy week data-wise, highlighted by the second reading of US Q1 GDPon Thursday morning. The FOMC’s minutes from its latest meeting will be released Wednesday afternoon, and markets will see the Fed’s preferred inflation gauge of PCE on Friday.
What to Watch This Week…
- FOMC Meeting Minutes, Wednesday 2 PM
- US Q1 GDP 2nd Reading, Thursday 8:30 AM
- US Personal Income & Spending, Friday 8:30 AM
- US PCE Price Index, Friday 8:30 AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇓
The single currency whipsawed in choppy trading over the US holiday, gaining on the Buck through Monday’s thin session, but has since reversed course to trade 0.2% weaker against USD this morning. EUR initially ran up the score following the announcement of a delay on 50% tariffs against the EU, but is now facing some increased selling pressure as hope grows for a substantive trade deal between the EU and the US. European Central Bank President Christine Lagarde, in a speech Monday, said that President Trump’s “erratic” trade policies have given the Eurozone a prime opportunity to raise the currency’s global profile and highlighted the EUR’s potential to become a haven against risk.
JPY ⇓
Japanese Yen is the biggest loser in the G10 this morning following choppy trading over the holiday weekend. JPY initially gained ground on Monday evening following some hawkish commentary from BoJ Governor Kazuo Ueda, saying that Japan is closer to its inflation target than it has been in 3 years, which would set the stage for a rate hike from the central bank later this year. This move has since been completely reversed and then some, though, following the finance ministry’s rare step of asking market participants for their input on bond issuance. Longer-term JGBs shot lower in response, and 30-year yields are currently trading roughly 19 basis points lower.
