The Morning Update

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After yesterday’s volatile day, the market seems to have found some footing…at least for now. The USD is flat this morning, oil, equities and bond yield are trading higher. A day before Trump's "reciprocal" tariffs start, the global economy teeters. While some nations seek to reconcile, China retaliates. Despite concerns from allies, Trump presses on, dismissing questions about market losses. Shares in Europe and Asia rebounded slightly on Tuesday after several days of selloffs triggered by Trump's tariff announcement. U.S. stock markets may also see a small rise. Despite this, recent volatility and major losses have wiped out trillions in investor wealth.

The market has been volatile since the US tariffs have been implemented on April 2nd. As of this morning these are the biggest movers are:

DJIA -10%               S+P -9.3%               NASDAQ -9.5%            FTSE -9.3%

Nikkei -8.0%            Hang Seng -14.2%         Shanghai – 6.1%              Oil -14.4%

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News Headlines. The U.S. and Iran will hold "direct talks" on Saturday over a nuclear deal. Trump warned it would be a "very bad day for Iran" if no agreement is reached. Zelensky confirmed Ukraine's troops are active in Russia's Belgorod region, aiming to protect borders and ease pressure on Donetsk.

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In currency markets. The USD is losing its safe-haven status as U.S. companies and consumers face rising uncertainty. Trump's tariff hikes are causing global economic shock, which also impacts the U.S. due to its reliance on global trade. The JPY strengthens against the US Dollar, supported by expectations of BoJ rate hikes and concerns over Trump’s tariffs. However, worries about the tariffs' impact on Japan and improved global sentiment may limit JPY gains. Meanwhile, fears of a US slowdown could lead to Fed rate cuts, favoring the JPY. South Korea will hold a snap presidential election on June 3, following the impeachment of former leader Yoon Suk Yeol over a brief martial law declaration. Asian currencies are mixed this morning, with the JPY strengthening by 0.55% against the USD. Meanwhile, the CNY (-0.2%), THB (-0.34%), and MYR (-0.25%) are weaker against the greenback. The AUD and NZD have both gained more than 1.0%. In emerging markets, the MXN appreciated by 0.44%, while the ZAR rose over 1.0% against the USD.

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In commodity markets. Oil prices rebounded 0.40%, but risks remain as Trump's tariff threat could escalate tensions and hurt demand. OPEC+ may reverse supply hikes if downward pressure continues, with the Saudis needing oil at $90/bbl to balance their budget. Metals are trading higher, with gold rising 0.92% and silver up 0.84%. Agricultural commodities are mixed, as soybean and wheat gain 1%, while lumber falls by 3.46%.

Current level USD Index                103.149         Down 0.10%

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USD/CAD weakened due to soft USD sentiment and rising oil prices. As Canada’s general election approaches, traders are focused on the Bank of Canada (BoC) and Federal Reserve's interest rate policies.

Current level USD/CAD                   1.4192            Down 0.38%

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EUR/CAD remains under pressure after yesterday’s selloff, with the Euro facing weakness and the Canadian Dollar supported by rising oil prices. Market focus is on upcoming economic data and central bank decisions, keeping the pair volatile.

Current level EUR/CAD                   1.5522            Down 0.15%

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EUR/USD is higher in Tuesday's European session but struggles to break 1.1000. The USD remains under pressure following Trump’s new tariffs, with markets worried they could lead to a recession. Trump also threatened a 50% tariff hike on China if it doesn't retract its retaliatory tariffs.

Current level EUR/USD                   1.0939            Up 0.24%

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GBP/EUR The British pound stabilized after a 1.4% drop following Trump’s tariff announcement, while the euro strengthened as Germany unveiled a €500 billion investment fund aimed at reviving its economy.

Current level GBP/EUR       1.1671 (0.8570)         Up 0.15%

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GBP/USD is up 0.25% after a sharp sell-off in the last two days. The US Dollar is struggling to gain ground as traders expect the Federal Reserve to cut rates in June to combat recession risks. Trump's reciprocal tariffs and fears of countermeasures from China and the Eurozone have heightened recession concerns, with Goldman Sachs raising the likelihood of a US recession to 45%.

Current level GBP/USD                   1.2764          Up 0.33%

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