The US dollar remains under broad pressure on this Tuesday. The euro has, however, struggled to gain momentum today despite the dollar weakness—perhaps due to political turmoil in Germany, where Friedrich Merz fell short of the votes needed to become chancellor.
Meanwhile, the ECB’s Stournaras signaled continued interest rate cuts on a meeting-by-meeting basis, while ECB’s Panetta warned of the global economic risks posed by a new wave of protectionism in China.
CACs and services and positive PMIs underperformed, with the latter dropping to 51.1 in April from 51.8 the previous month.
On trade, Trump expressed openness to reduce tariffs on China, noting current high levies have nearly halted business between the world’s two largest economies—hinting at potential trade deals with other nations as early as this week to ease import duty pressures.
US Treasury Secretary Scott Bessant emphasized America’s role as a top destination for global capital, arguing Trump’s policies would reinforce this status, countering the “Sell US” narrative that emerged after April’s Liberation Day.
In the UK, the April services PMI was confirmed at 49, reflecting stagflationary trends with a sharp decline from March’s 52.5—the fastest drop since January 2023—alongside rising input cost pressures not seen since July 2023.
Upcoming US and Canadian trade data for March is expected to reflect distortions from pre-tariff business activity.
Attention also turns to a critical White House meeting between Canadian PM Carney and President Trump, where Carney—having campaigned firmly against Trump’s threats to annex Canada as the 51st state—will need to navigate a delicate diplomatic challenge redefining the future of US-Canada cooperation.
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