Markets seem to finally have found a semblance of relative calm this morning, but that calm is not benefitting the United States Dollar which continues its slide against its major peers.
Overview
General global sentiment has improved over the last couple days, boosting some risk-forward moves. President Trump announced yesterday that he would be exploring a tariff exemption around autos, easing some of the worst fears for the health of the European economy in particular. Secretary Scott Bessent, as well, said that many countries could have trade deals in place with the US before this current 90-day reprieve on blanket levies expires, and said he is ‘not concerned’ with the Dollar losing its safe haven status.
FX moves in general, though still outsized this morning in the grand scheme of things, are a bit calmer than traders have witnessed in the last two extraordinarily volatile weeks. US bonds and equities, too, are attempting to stage a bit of a recovery after being routed, placing the Dollar’s movement this morning in a much more traditional pattern. Tariff worries, nonetheless, do remain a strong undercurrent in markets after China ordered its airlines to cut off all delivery of Boeing jets, continuing the seemingly ever-present escalation of trade tensions between the world’s two largest economies. Traders did, though, get some dovish commentary from Fed Governor Christopher Waller yesterday afternoon, easing concerns that the Fed would not be cutting rates at all given risks to inflation from Trump’s on-again, off-again tariff policy. Waller said that should the threat of a recession materialize, the Fed would move sooner rather than later to ease financial conditions, and the Fed remains nimble and data-dependent on the inflationary side of its dual mandate.
The global data calendar is fairly quiet today, but there are two major risk events before many nations around the world close markets in observance of the Easter holidays: the Bank of Canada’s rate decision Wednesday, and the European Central Bank’s subsequent decision Thursday.
What to Watch This Week…
- US Retail Sales, Wednesday 8:30AM
- Bank of Canada Rate Decision, Wednesday
- European Central Bank Rate Decision, Thursday
- Monex USA Online is always open
The complete Economic Calendar can be found here.
GBP ⇑
Pound Sterling is advancing for a sixth straight session against USD this morning, climbing to its strongest rate against the Buck since early October. GBP has also become a popular risk-forward trade move, as the United Kingdom appears to be escaping the worst of the fallout from this now-global trade war as a nation that imports from more than it exports to the US. GBP did pare some of its early gains after employment data came in softer than expected, clearing the way for some easing from the Bank of England at its next meeting on May 8th, the day after the Federal Reserve is expected to hold rates in the US steady.
AUD ⇑
The Antipodean currencies are posting outsized positive gains across the G10 board this morning, with AUD up three quarters of a percent against USD and NZD soaring more than a percent in early trading. The Australian Dollar in particular has been a popular risk barometer for traders around the world since the 2008 global financial crisis, and the currency’s movement over the last two weeks has been no exception. Australian stocks followed Asian equities yesterday and today and posted a rally after President Trump indicated markets would get temporary relief from some of his most punishing tariff policies.
