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Reuters on comments from a senior International Monetary Fund (IMF) official:

• Bank of Japan likely to push back timing of further rate hikes if IMF’s reference scenario materializes

• Japan’s inflation likely to converge to BOJ’s target sometime in 2027 rather than in 2026, as initially expected

• Balance of risks is to the downside for Japan’s economic growth, inflation

• Yen remains safe-haven currency given strength, predictability and stability of Japan’s economy

• IMF supports Japan’s commitment to flexible foreign exchange regime, which helps absorb shocks

This article was written by Eamonn Sheridan at www.forexlive.com.

Trump threatens higher tariffs on Canadian car imports, escalating trade tensions

• warned that the existing 25% tariff on Canadian car imports could be raised
• pushing his interest to bolster U.S. auto production and reduce dependence on foreign-made vehicles
• “We don’t want your cars … we want to make our own”

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Canada is a major auto exporter to the U.S., with highly integrated supply chains under the USMCA trade pact.

A tariff increase would likely spark sharp Canadian retaliation and potential legal challenges under USMCA rules.

This article was written by Eamonn Sheridan at www.forexlive.com.

Trump says 25% tariff on cars from Canada could go higher:

• we don’t want cars from Canada
• has spoken to Canadian Prime Minister Carney, we’ve had nice conversations
• working on a deal with Canada
• dollar is a bit on the low side
• not considering changes to auto parts, auto tariffs (contradicting this from earlier: The FT is reporting that Trump will exempt carmakers from some US tariffs )

This article was written by Eamonn Sheridan at www.forexlive.com.

Trump says it depends on China how soon tariffs can come down:

• have spoken to 90 countries regarding tariffs already
• over the next 2 – 3 weeks will set tariff for China
• If we don’t make a deal, we’re just setting the price, then they can decide if they want

• China is not doing any business with us — rate is still 145%

• I have not called Federal Reserve Chair Powell, may call him

Trump’s remarks coming after an executive order signing ceremony in the Oval Office. The orders were related to education.

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Trump spoke yesterday after the market close. I had someone ask why he didn’t provide such bullish comments during market hours. The answer is that he gets more bang for his buck with comments at times of low to zero liquidity.

This article was written by Eamonn Sheridan at www.forexlive.com.

• White House reportedly mulling cutting China tariffs to de-escalate trade war
• White House would look at lowering tariffs pending talks with Beijing
• Bessent: No unilateral offer from Trump to cut China tariffs
• US Treasury Sec Bessent says Trump administration wants to help China &U.S. rebalance
• Several OPEC+ members want the group to approve another accelerated oil output increase
• S&P global manufacturing PMI for April 50.7 versus 49.1 estimate.
• US new home sales for March 0.724M vs 0.680M estimate
• Beige Book: Economic activity was little changed, outlook in some districts worsened
• ECB’s Lane: US dollar asset allocation has shifted to neutral from overweight
• Leavitt: There will be no unilateral reduction in tariffs against China
• BOE Bailey at IMF conference: Fragmenting the world economy will be bad for growth
• ECB’s Muller: Too soon to tell whether June will be a cut or a pause
• US treasury auctions off $70 billion of 5-year notes at a high yield of 3.995%
• ECB’s Knot: A US tariff of 25% on imports would lower GDP by about 0.3 pp
• ECB Knot: He is not concerned about prospect of stronger EUR
• World Bank cuts Mexico 2025 GDP forecast to 0% from 1.5%
• US crude oil inventory 0.224M vs -0.770M est
• FOXBusiness Gasparino: Don’t expect China’s Xi to jump on the first offer on trade truce
• Fed’s Goolsbee: Increase in productivity seeming to be a tech driven boom
• Canada March new housing price index 0.0% vs +0.1% prior
• U.S. budget deficit projected to fall to 6.5% of GDP in 2025 due to tariff collection…

Markets:

• Gold down $96 to $3285
• US 10-yaer yields flat at 4.39%
• WTI crude oil down $1.39 to $62.28
• S&P 500 up 1.7%
• USD leads, CHF lags

The US dollar was strong on Wednesday as the market continues to sense that Trump will retreat on tariff policies. The heavy selling of the euro, yen and pound came first in Asia but then there was a strong bounce later in Asia and dollar trades flattened out from there. However a second wave of dollar buying came with the arrival of New York and the extremes of the day were retested and — in the case of USD/JPY — broken.

There were no exemptions to the ‘Buy America’ trade in FX as even the Aussie was sold off despite strong bids in equities. That was a similar (albeit inverse) dynamic to how it unfolded when the dollar was falling.

The price action in bonds might have been the most-interesting of the day as yields initially tumbled with 10s falling to a 10-day low of 4.25% before reversing midway through US trading to 4.39% and finishing flat. Were there sellers waiting in the weeds? What does that say about USD demand? It’s only one day but long-dated are still where they were last week while equities signal a potential policy change.

Another big move was in the oil market as a report said that Kazahkstan was playing tough on paying back overproduction from quotas. That could ultimately lead to a fracturing but for now it looks like Saudi Arabia may try to hold it together by accelerating the return of barrels. At the moment, none of the producers are winning as today’s talk led to a sharp decline in crude in an otherwise optimistic day.

On net, the market is carefully evaluating tariffs and how likely they are to stick. It’s all very speculative and depends on the mood of one man but for now, retracement is the mood as we wait for trade deals and improvement between Washington and Beijing.

This article was written by Adam Button at www.forexlive.com.

The U.S. Commerce Department has initiated a national security investigation under Section 232 into imports of medium- and heavy-duty trucks and their components.

The review aims to determine whether these imports threaten national security, potentially leading to new tariffs.

• The investigation focuses on foreign-made work trucks and parts.

• If deemed a security risk, the government may impose tariffs.

• The probe will examine U.S. manufacturing capacity and reliance on overseas suppliers.

• It forms part of broader efforts to strengthen domestic industrial resilience.

This article was written by Eamonn Sheridan at www.forexlive.com.

The FT is reporting that Trump will to exempt carmakers from some US tariffs

more to come

FT is gated, but the gist of it is that Trump is expected to ease back on some of his toughest tariffs affecting the auto industry.

• intends to exclude car parts from the China-focused tariffs tied to fentanyl production, as well as from existing steel and aluminium duties, — effectively “destacking” the levies.
• there has been heavy lobbying by carmakers to have him reconsider.

FT cites two sources familiar with the plan.

This article was written by Eamonn Sheridan at www.forexlive.com.

CNBC with the report, in brief:

• A dozen states sued President Donald Trump and his administration, seeking a court order declaring that his new tariffs are illegal.
• “The president does not have the power to raise taxes on a whim, but that’s exactly what President Trump has been doing with these tariffs,” New York Attorney General Letitia James said in a statement on the lawsuit.
• The suit was filed in the U.S. Court of International Trade in Washington, D.C.

More details here.

The article lists 11 states:

• New York, Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, New Mexico, Oregon and Vermont.

This article was written by Eamonn Sheridan at www.forexlive.com.

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

This article was written by Eamonn Sheridan at www.forexlive.com.

Ryan Petersen from Flexport today highlights that it’s been 3 weeks since large US tariffs were put on China and that ocean container bookings are down over 60% across the industry.

He notes that the US imports $600 billion in goods (though I think the correct number is $460 billion) from China annually and those goods retail for around $2 trillion.

He said the first ships carrying goods that will be hit with the full rates arrived on Monday and the decline in freight will start to hit in the following weeks, though it will take awhile to hit retail because of a build in inventories.

Petersen also worries that an undoing of the tariffs will eventually cause a separate set of problems as ships are now being repositioned globally and that a surge in orders later could overwhelm the network — particularly if a reprieve in China tariffs is seen as temporary.

I don’t think anyone really knows how this will play out as many of the imports are intermediate goods and components for finished products. My guess is that this ultimately ends in a boom for transshipment and smuggling but it could easily be covid all over again or result in surprisingly little downsides. It’s truly uncharted waters.

“It’s a strange time in the logistics world as we have to plan for the unimaginable (autarky in the United States) while hedging for regression to the mean (relatively normal trade relations),” Petersen writes.

This article was written by Adam Button at www.forexlive.com.

Crude oil futures is settling at $62.27. That is down $1.40 or -2.20%.

There was a report earlier today that several OPEC+ members want the group to approve another accelerated oil output increase for June at meeting on May 5. The news sent the price to a low for the day at $61.55. That low took the price below the 200 hour MA at $61.95 but the price has moved back above that MA in to the settlement.

Staying above is more neutral technically, A move above the higher 100 hour MA at $62.94 would be more bullish. Conversely, a move back below the 200 hour MA would tilt the bias lower.

This article was written by Greg Michalowski at www.forexlive.com.

So we have the Treasury Secretary and White House spokeswoman saying this but she is also saying that it’s up to Trump on what the China tariff rate will be.

That gets to the heart of the issue: Even if they’re saying this, Trump often changes his mind.

You used to be able to assume that Trump would do whatever was best for the stock market but that’s no longer the case.

Also: Trump will speak at 5 pm ET.

This article was written by Adam Button at www.forexlive.com.