Markets are already showing signs of recovery after the sharp risk-off gap lower. The market selloff around tariffs appears overstated, likely exacerbated by thin trading conditions.
Recent U.S. tariff actions could be scaled back as negotiations progress, and markets tend to fill open gaps. The Canadian dollar saw significant weakness, hitting its lowest level against the U.S. dollar since 2003, prompting countermeasures from Canada.
Tariff news has overshadowed Friday’s U.S. data, which showed core inflation ticking higher. Investors will watch this closely, as stronger inflation could pressure the Fed to delay rate cuts.
Earlier today, manufacturing PMIs from Germany, the Eurozone, and the UK came in stronger than expected, while Eurozone inflation ticked up, supporting demand for the euro and the pound.
Looking ahead, key releases include Canada’s manufacturing PMIs, U.S. ISM Manufacturing, U.S. construction spending, Fed commentary, and ECB statements.
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