FOREX NEWS & BLOG

• Major US indices close higher for the second consecutive day
• VP Vance:US would walk away from Russia/Ukraine talks if Russia not engaging in good faith
• White House weighing plan to slash China tariffs to as low as 50% – report
• White House Navarro: To the EU, retaliation is a mistake
• Crude oil futures settle at $59.91
• Chicago-born Cardinal Robert Prevost elected as new Pope
• US treasury auctions off $25B of 30 year bonds at a high yield at 4.819%
• Bitcoin hits $100K. Some background emerges on Trump’s touting of XRP
• Trump says template for 10% tariffs is ‘probably the lowest’
• Trump asked if China tariffs could be lowered: Says they could be
• UK says steel and aluminum tariffs reduced to zero
• NY Fed 1-year inflation expectations tick higher
• Trump: Reached breakthrough deal with UK
• US March wholesale inventories +0.4% vs +0.5% expected
• US initial jobless claims 228K versus 230K estimate
• US Q1 unit labor costs prelim +5.7% vs +5.1% expected
• Russia and China intend to ramp up cooperation to decisively counter US containment
• ForexLive European FX news wrap: US-UK trade deal looms, BOE vote split raises eyebrows
• The BOE cuts by 25 basis points but it is a mixed decision. USDJPY higher. EURUSD lower.
• EU announces list of potential countermeasures against US tariffs if trade talks go south
• The EU is considering imposing tariffs on €95bn of US imports

It was UK day as the Bank of England cut rate by 25 basis points which was not a surprise, but the dissenters who wanted to cut by 50 basis points and dissenters who wanted to leave right unchanged. That put the BOE Chair Bailey in the hot seat as he maneuvered through Q&A questions.

Despite the rate cut, the BOE’s guidance remained unchanged, emphasizing a “gradual and careful” approach to easing—repeating the tone from March.

After that, the US and the UK announced the framework for a trade deal. According to US commerce Sec. Lutnick, the deal adds US$5 billion of opportunity for US exporters, and keeps a 10% tariff on all goods in place. He added that UK would buy $10 billion worth of Boeing planes. The US said that they would allow Rolls-Royce engines and plan parts to come over tariff free and exempted Rolls-Royce and Bentley automobiles from tariffs as well (thank goodness).

According to Trump, he and PM Starmer reached an agreement that will increase access for U.S. beef and ethanol, while also committing to reduce non-tariff barriers. As part of the deal, the UK will fast-track U.S. goods through customs, allowing for quicker movement in both directions.

Final details of the agreement are expected to be finalized in the coming weeks – a sentiement expressed by UK officials as well. Additionally, the U.S. will gain new market access for chemicals and machinery.

As Josh Brown on CNBC said sarcastically, “The US reached an agreement with its strongest ally for the last 200 plus years. Amazing news.”.

Later, Trump spoke of confidence for the forthcoming meetings with China over the weekend, and the NY Post, reported that the US may cut tariffs on China goods to 50% by as early as next week. Trump said the best a country can do is 10% tariffs.

Stocks were supported with gains now over the last 2 trading days after declines on the first 2 days of the week. For the day and the week (with one day to go):

• Dow rose 0.62%, and holding to a 0.12 gain for the week
• S&P rose 0.58%, but is still down -0.40% for the week
• Nasdaq rose 1.07% but is down -0.28% for the week.

The last day of the week will decide up or down for the week.

The USD move up vs the major currencies. A snapshot of the greenbacks gains vs the currencies showed the strongest gain vs the JPY (+1.45%) and the smallest gain vs the AUD (+0.34). The EUR fell -0.54% vs the USD and the GBP in volatile up and down trading on all the headline news, fell -0.37%. The CHF rose 1.01% vs the USD.

In the US debt market, yields moved higher helping to support the USD:

• 2 year yield 3.880%, +8.7 basis points
• 5 year yield 3.986%, +11.4 basis points
• 10 year yield 4.380%, +10.5 basis points
• 30 year yield 4.846%, +7.5 basis points

The US auctioned off $25B of 30 year bonds but was met with tepid demand (0.7 basis point tail and lower than average Bid to cover).

In other markets:

• Crude oil rose $2.17 or 3.74% to $60.24
• Gold fell $60 or -1.79% to $3304.98
• Bitcoin rose $5558 or 5.73% to $102,608

This article was written by Greg Michalowski at www.forexlive.com.

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Bloomberg (gated) report on China buying nearly US$1bn in agricultural product from Argentina instead of the US:

• China agreement with exporters in Argentina
• non-binding letter of intent signed
• Bloomberg cite two people familiar with the matter

China is already Argentina’s biggest buyer of unprocessed soybeans.

Some Friday muzak:

This article was written by Eamonn Sheridan at www.forexlive.com.

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US Commerce Sec Lutnick was speaking in a Fox interview:

• We want a trade deal from a big country from Asia
• I am focused on big countries for the next trade deals
• The UK deal helps ease reliance on the China supply chain a bit

Earlier from the Com Sec:

• Lutnick says the best any country can do is a 10% US tariff

CSLutnick

This article was written by Eamonn Sheridan at www.forexlive.com.

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US Commerce Secretary Lutnick on CNBC:

• if a country opens its markets the best it can hope for is a 10% US tariff
  • “The 10% baseline is for countries that have balanced budget with us, that are the best, and those who had trade deficits are going to have a higher tariff. The best they can do is 10% — most likely they’ll be higher.”
• Deescalation with China is Bessent’s goal in talks
• says favours Trumps plan for raising the tax rate on high earners

WH Trade Adviser Navarro says:

• US is not getting rid of the tariffs on steel and aluminium

more to come

This article was written by Eamonn Sheridan at www.forexlive.com.

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