USD & stocks hammered in illiquid trading & the Indian stock market rally continues
President Trump shook global markets during the long weekend, calling Federal Reserve Chairman, Jerome Powell, a “major loser” for not lowering interest rates – adding to his many previous comments and threats to remove the independence of the Federal Reserve, which is currently illegal.
GBP: GBP/USD hit a 3yr high yesterday, trading up to 1.3425. GBP/EUR has fallen recently, around 1.1620 this morning but overall, GBP has shown a mixed performance. Traders have become increasingly confident that the BoE could cut interest rates in the May policy meeting amid ongoing global economic tensions.
There is also the chance that the UK will have a trade deal with Washington after Trump's administration imposed 10% reciprocal tariffs and 25% levies on steel and foreign cars. However, the major threat to the UK is intense competition with other nations who are also forced to react to new tariffs.
USD: This evening sees 2 Federal Reserve members speak, and tomorrow we have important data released. Trump’s words yesterday forced the USD down to 3yr lows as he appeared to blame the Federal Reserve for recent slowdown in activity and the stock market collapse. This ‘war’ and Trump’s continued threats to sack Powell are fuelling fears that Trump’s desire for power could one day remove all checks and balances within the US political system.
EURO: The €€ rose to 4yr highs vs the USD, hitting 1.1570 yesterday, now settling at lower levels. Another break through 1.1570 could see the pair rise to 1.1830 on technical analysis. This week’s data will focus on Wednesday’s services and manufacturing data and the ECB speakers who are now dealing with renewed chaos in global markets.
India: With JD Vance and family in India over the long weekend, the stock market rallied 5% on hopes of a ‘deal’ and the general consensus that India may be a net gainer in light of the trade ‘wars’. The INR also rallied, but it’s rise is likely to be slowed or halted by the Central Bank, who is likely to step in and by USD to curb the strengthening INR.
This week’s data:
Tuesday
US: 2 Fed speeches
EU: ECB member speech
AUD: Manufacturing and Services data
Wednesday:
UK: Manufacturing and Services data
UK: Retail Sales
EU: Manufacturing and Services data
EU: ECB speeches
Germany: Manufacturing and Services data
US: Manufacturing and Services data
Thursday:
US: Durable Goods Orders & Fed member speech
UK: Bank of England speech
Friday:
CAD: Retail Sales
US: Confidence data