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• China’s Xi has called him.
• His administration in active talks with Chinese to strike a deal.
• Crimea will stay with Russia.
• Would consider it a victory if US has 50% tariffs a year from now.
• I wasn’t worried during April bond stress.
• Predicts Saudi Arabia will go into the Abraham accords.
• Bessent and Lutnick didn’t tell me to do 90-day pause.
• I love the concept of raising tax on wealthy.

“China’s Xi has called him.” – The market would have reacted with a rally a week ago, but you can understand the distrust now given that the Chinese keep on repeating that Trump is lying.

“Would consider it a victory if US has 50% tariffs a year from now.” – This is not a good looking headline

Click here for the full interview

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Rate cuts by year-end

• Fed: 83 bps (92% probability of no change at the upcoming meeting)
• ECB: 61 bps (75% probability of rate cut at the upcoming meeting)
• BoE: 85 bps (97% probability of rate cut at the upcoming meeting)
• BoC: 43 bps (51% probability of no change at the upcoming meeting)
• RBA: 117 bps (96% probability of rate cut at the upcoming meeting)
• RBNZ: 81 bps (86% probability of rate cut at the upcoming meeting)
• SNB: 28 bps (75% probability of rate cut at the upcoming meeting)

Rate hikes by year-end

• BoJ: 17 bps (93% probability of no change at the upcoming meeting)

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Economic slowdown in Switzerland cannot be ruled out.
• Trade policy situation is creating high uncertainty for all countries, including Switzerland.
• Price stability cannot prevent trade policy related uncertainty, but still very important.
• Trade policy could fragment global economy.
• Main instrument is interest rate, but we can also use forex interventions to influence monetary conditions.

The central bank is certainly not happy with the Swiss Franc strength. This is a greenlight for more CHF weakness barring risk-off flows.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Thailand will eventually be able to negotiate tariffs with the US, get the most benefits.
• Exports may be bumpy but not bad this year.

Thailand was hit with 36% reciprocal tariffs before Trump paused and lowered them to 10% for 90 days. The underlying market expectations is that the trade war will continue to de-escalate and eventually we will get to trade deals.

This is what keeps the markets pricing in better news in the future probably until we get to the first trade deal. That will be the next key catalyst as markets expectations will be built based on that first deal.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Next policy steps are completely open.
• Tariff net impact so far rather disinflationary.
• I see economic scars even if tariffs are lowered.

He’s generally a hawk, but these comments are rather dovish.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• China and US are not having any consultations or negotiations on tariffs.
• On tariff exemptions on some goods: I’m not familiar with specifics, I refer you to competent authorities.

Just yesterday, Trump said that they had a meeting with China in the morning. According to the Chinese, he’s not telling the truth. The market is erasing some of the gains built on previous optimism following these comments.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior 97
• Manufacturing confidence 99
• Prior 96
• Services confidence 98
• Prior 97

Despite an improvement in both industry and services sentiment, the French business climate remains gloomy in April as retail trade conditions worsened. Some good news is that the employment climate indicator is also seen improving slightly – up to 97 from 96 in March.

This article was written by Justin Low at www.forexlive.com.

• Prior +1.0%; revised to +0.7%
• Retail sales +2.6% vs +1.8% y/y expected
• Prior +2.2%
• Retail sales ex autos, fuel +0.5% vs -0.4% m/m expected
• Prior +1.0%; revised to +0.7%
• Retail sales ex autos, fuel +3.3% vs +2.2% y/y expected
• Prior +2.2%; revised to +1.8%

That’s a decent beat on estimates, though it comes with a bit of a minor downside revision to the February numbers. Of note, better weather conditions helped to bolster sales in clothing and outdoor retailers while supermarkets reported a decline in sales on the month. ONS estimates that retail sales should contribute 0.08% to GDP in Q1 at the balance. As for the overall picture, UK retail sales volumes are still down by 0.3% compared to their pre-pandemic levels i.e. February 2020.

This article was written by Justin Low at www.forexlive.com.

• To maintain abundant liquidity and strengthen support for the real economy
• Will create structural monetary policy tolls and new policy-based instruments to expand consumption
• Will focus on stabilising employment, market expectations
• Necessary to increase income of low and middle-income groups
• Will accelerate the integration of domestic and foreign trade
• Necessary to continuously improve policy toolbox to stabilise employment, economy
• Will implement established policies early
• To introduce reserve policies in a timely manner according to changes in the situation
• Will continue to make efforts to prevent and resolve risks in key areas
• Will speed up to implement more proactive, effective macro policies

This is the usual volley of remarks from Beijing, so it’s nothing new really. But in a time like this, it can be read that they are continuing to keep their focus on improving their domestic situation amid hunkering down. As a reminder though, China’s top legislature will be meeting on 27-30 April next and that might offer up more interesting comments on the economy.

This article was written by Justin Low at www.forexlive.com.

Amid fears of the tariffs war getting worse, gold surged higher earlier in the week and briefly clipped the $3,500 mark. Some profit-taking there and hopeful optimism on US-China relations then led to a retreat, which accelerated to a drop below $3,300 on Wednesday during US trading. But as the dust settles a bit, we’re seeing some near-term consolidation in price action at the moment:

As things stand, price is stuck in between its key hourly moving averages. The 100-hour moving average (red line) is helping to limit upside movement while the 200-hour moving average (blue line) is limiting downside movement. That keeps a more neutral near-term bias in gold until one of the above levels give way.

As much as there is an optimistic bounce in risk and the dollar in the past two days, there is still a large amount of uncertainty yet to be resolved in the whole tariffs war. Sure, there are some positive murmurs regarding US-China relations. But are they material enough to lead to stronger de-escalation? Not quite yet.

That might be what is keeping gold buyers interested. Not to mention, strong bids during Asia timing for the most part this week.

In the bigger picture, the latest setback hardly puts a dent in the bullish run in gold so far this year. The precious metal is still up 26% year-to-date. And unless Trump is willing to take a step back in the tariffs war, the underlying demand for gold will be hard to put down for now.

This article was written by Justin Low at www.forexlive.com.

• It looks like they’re starting to produce lists of exclusions for specific categories
• But have not yet seen any official announcement or policy on exclusions
• Some member companies have said that they have been able to bring in goods without tariffs being levied on them in the past week
• China commerce ministry is one of the organisations reviewing tariffs
• US department of commerce has also been soliciting opinions

There’s really two ways to look at this. On the one hand, tariff exclusions are a positive development as opposed to a complete standoff in trade. On the other hand, it just means that tariffs in general are going to be more of a mainstay by the look of things.

As for the latter, it still doesn’t mean that trade tensions are going to be resolved any time soon. And it will only be a matter of time before this translates to hard data and eventually economic data. If we’ve not priced in downside risks to that, there’s a danger of a pitfall when the time comes.

This article was written by Justin Low at www.forexlive.com.