The United States Dollar is trading relatively calmly against most major peers this morning, holding onto most gains the Buck managed to claw back throughout yesterday’s session.
Overview
Once again, trade tensions are at the forefront of traders’ minds after President Donald Trump hinted in a post on social media that negotiations with China would be fruitful and said that an “80% tariff on China seems right! Up to Scott B.” 80 percent would still be, of course, historically high, but would represent a substantial easement from the current effective rate of well over 200%. Trump also encouraged investors to jump into the stock market yesterday, which prompted some positive movement for the Dollar as well.
The UK yesterday signed the first official trade deal with the US following “Liberation Day,” which many strategists say does not constitute a “full and comprehensive” agreement and may in effect place the UK in a worse position than before April 2nd. This trade deal gives the US a streamlined customs process along with better market access for exports to the UK. The UK will also be allowed to send 100,000 cars to the US under a decreased levy of 10% rather than the 27.5% rate previously stated, and the US will not pay any levies on steel and aluminum imports. While this agreement does constitute some progress, more so as a signal to other nations that the US is actually willing to come to the table, it’s clear the point of trade negotiations thus far have been to improve just the lot of the US rather than the rest of the world.
There is little in the way of major data due out today, but the US is preparing to release April’s CPI figures next Tuesday. After the GDP Price Index last week showed inflation returned in a major way in the first quarter, traders are waiting with baited breath to see if this trend continued.
What to Watch This Week…
- No major economic releases today
- Monex USA Online is always open
The complete Economic Calendar can be found here.
GBP ⇑
Pound Sterling is trading a third of a percent stronger against USD following a busy 24 hour news cycle for GBPUSD that saw GBP slide half a percent yesterday in very choppy and volatile trading. GBP is now trading very close to its opening levels from yesterday morning, on the heels of a split decision from the Bank of England that cut its policy rate by 25 basis points. The BoE’s head economists Huy Pill spoke this morning and emphasized that “careful” rate cuts should be seen as the central bank being alert and response to current and future economic conditions, and that it’s possible policymakers will need to adjust the pace of their current easing cycle.
CAD ⇓
The Canadian Dollar is trading relatively flat this morning, but this comes on the heels of a major loss for the Loonie through yesterday’s session to the tune of two thirds of a percent, following the trend of most majors. This places CAD just off its weakest point against USD since April 15. Canada’s employment data for April, released earlier this morning, showed that while the economy added 5,000 jobs last month unemployment rose more than expected to 6.9% from 6.7% in March. Part time employment bore the brunt of the underperformance, contracting by 24.2K.
