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Trump and Chinese President Xi to meet in early May.

more to come

Trump dialled back his tariff policy in China, some describing it as his latest cave in:

• Trump’s China reversal – now we await China’s response (if any)

More:

• Trump said had no intention of firing Fed Chair Powell (he did). Major reversal from Trump

• Trump backing away from tariffs, backing away from firing Powell – will it last?
• Trump says he has no plans to Fire Federal Reserve Chair Powell
• Trump says he is going to be very nice to China, they have to make a deal

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

Trump’s comments earlier warned that the U.S. will set the terms of trade if China refuses to reach a deal, but also expressed openness to negotiation and hinted at a partial reduction in tariffs once an agreement is struck.

The comments reflect an approach balanced by the possibility of easing some tariffs, though not eliminating them entirely, as trade negotiations with Beijing have not yet begun.

• Trump said the U.S. would dictate trade terms if China doesn’t agree to a deal.

• He described his intended approach to talks with Beijing as “very nice.”

• Tariffs on Chinese goods would be substantially reduced after a deal, but not fully removed.

• Current U.S. tariffs on Chinese imports reach as high as 145% under Trump’s policy.

• Despite mutual economic pressure, formal trade negotiations between the U.S. and China have yet to restart.

***

The news of major impact was his reversal on firing Powell. Its sent equity index futures and the US dollar higher.

• Trump said had no intention of firing Fed Chair Powell (he did). Major reversal from Trump

• Trump backing away from tariffs, backing away from firing Powell – will it last?
• Trump says he has no plans to Fire Federal Reserve Chair Powell
• Trump says he is going to be very nice to China, they have to make a deal

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

Australian preliminary PMI from S&P Global for April 2025:

51.7

• prior 52.1

Services 51.4

• prior 51.6

Composite 51.4

• prior 51.6

The big news so far today is this:

• Trump said had no intention of firing Fed Chair Powell (he did). Major reversal from Trump

• Trump backing away from tariffs, backing away from firing Powell – will it last?
• Trump says he has no plans to Fire Federal Reserve Chair Powell
• Trump says he is going to be very nice to China, they have to make a deal

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

The Wall Street Journal is gated, but Reuters have the gist of the report:

• US will aim for the U.K. to reduce its automotive tariff from 10% to 2.5%
• US will also push UK to relax rules on agricultural imports from the US, including beef, and revise rules of origin for goods from each nation

WSJ cites unnamed sources for what is in the US negotiation terms for trade talks with the UK.

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

Comments from Citigroup’s Chief Economist via a Reuters report ICYMI. In brief:

• “Tariffs are a stagflationary shock to the U.S. economy”
• 40% to 45% chance of recession
• expects Q2 GDP up, driven by consumers making purchases ahead of tariffs coming into effect
• largest negative impact on U.S. growth is expected during H2
• market reaction to tariffs and Trump’s attacks on Federal Reserve chair Powell may have a long-lasting impact
• Trump’s attack on Powell shows an “implicit admission of these negative effects” associated with the tariffs
• Markets’ reaction since the announcement of tariffs shows a loss of confidence in U.S. policies
• “Should we mark down estimates of real GDP growth for the U.S. over the next three to five years? Maybe, if you think there is a lasting structural damage to the economy due to compromising of U.S. institutions”

***

These remarks from Cit came before the latest policy reversals from Trump;

• Trump backing away from tariffs, backing away from firing Powell – will it last?
• Trump says he has no plans to Fire Federal Reserve Chair Powell
• Trump says he is going to be very nice to China, they have to make a deal

The Citi comments will be useful to refer back to if/when Trump reverses again.

***

Updating yen and euro:

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

Trump has lost his credibility with markets, so take these with a grain of salt:

• Trump, asked if he’ll play hardball with China: no

• China, other countries have to make a deal
• If they don’t make a deal, we’ll set the deal
• This is a transition period
• Tariff on China will not be as high as 145%
• It’ll come down substantially but won’t be zero

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

• Tesla earnings: Revenue of $19.335B vs $21.111B expected
• US equity close: Turnaround Tuesday as stocks get back to flat on the week
• The gold reversal will be tested in Asian trading
• Goldman Sachs: Bullish GBP/USD but cautious on GBP vs. European FX
• Crude oil futures settled $64.31
• US trade deals said not to be imminent – report
• Fed’s Barkin: Inflation expectations may have loosened
• The Bessent fiasco continues as he tries to walk back comments
• Fed’s Kashkari: Backdrop of high inflation risks de-anchoring inflation expectation
• Bessent belives there will be a US-China de-escalation in ‘the very near future’
• When the headline and the text of the story tell a completely different story
• Treasury Secretary Bessent: China negotiations will be a ‘slog’
• Politico: White House reportedly close on Japan and India trade agreements
• US treasury auctions $69 billion of two year notes at a high yield of 3.795%
• European indices close mostly higher
• Bessent told people he sees de-escalation with China at JPMorgan private event
• ECB’s Lagarde: Either we cut or pause but we will be data dependent to the extreme
• Eurozone April flash consumer confidence -16.7 vs -15.5 expected
• April US Richmond Fed composite index -13 vs -4 prior
• Bitcoin cracks $90,000 in a rally to the highest since March 7
• IMF cuts 2025 global growth forecast to 2.8% from 3.3%
• Philly Fed services survey plunges to the lowest since May 2020
• Canada March PPI +0.5% m/m vs +0.3% expected
• The EURUSD, GBPUSD and USDJPY are consolidating after USD selling yesterday. What next?
• ECB’s Kazimir: Interest rates are now within the neutral range
• Forexlive European FX news wrap: Some calm after Monday’s swings
• ECB’s Rehn: Great uncertainty is restraining economic activity

The “Sell America” day yesterday, transitioned to “Buy America” today with US stocks erasing all the declines from yesterday (-2.5% or more). Today, the major indices closed up over 2.5% with the:

• Dow up 2.66%
• S&P up 2.51%, and the
• Nasdaq up 2.71%.

Although yields along the yield curve were mixed with the 2 year up 6.9 baiss point to 3.82%, the 10 year was marginally lower by -0.4 basis points and the 30 year was down -2.6 basis points.

The 2-year note auction was sloppy with a positive tail of 0.6 basis points over the WI level at the time of the auction. The bid-to-cover was less than the 6 month average, with domestic demand surging to give support from what was a plunge in international buying (56% vs 73% average). It is worth monitoring for signs of less international demand in US debt, which could force yields higher. Tomorrow the US treasury will auction 10 year notes at 1 PM ET.

Helping the better tone in stocks and a move back into the USD today, were reports from a JPMorgan Private investor conference where Treas. Sec. Bessent reportedly said that he sees de-escalation with China in the very near future. The traders Pavlovian reaction was to take stocks higher and with it the USD. Later, it was clarified that an Imminent agreement overstated what he said. Instead, he meant that there is room for talks and de-escalation but much also depends on China’s willingness to compromise on trade as well.

Whoops.

Later it was reported that,

• Bessent & Co were actively working to secure trade agreements with key U.S. allies including India, South Korea, Japan, and Australia, though sources indicate that no deals are imminent. They called the imminent deals with India and Japan to be a “memorandum of understanding” with the “thorny details to be hashed out at a later date”. In other words, there is no deal per se.
• VP Vance was reportedly taken on a leading role as a “major executor” of trade negotiations, aiming to expedite progress with these partners.

In Fed speak today, Federal Reserve officials offered cautious remarks on inflation and monetary policy today, with a shared concern about the stability of inflation expectations. Richmond Fed President Tom Barkin hinted at a possible shift, noting that inflation expectations may have loosened—a subtle but notable change in tone.

Minneapolis Fed President Neel Kashkari echoed similar concerns, warning that the backdrop of high inflation raises the risk of unanchoring inflation expectations. While he acknowledged that tariffs typically create a one-time rise in prices, the combination of persistent inflation and new trade barriers could destabilize expectations. Kashkari emphasized that policymakers cannot allow expectations to become unanchored, even though, so far, long-term inflation expectations remain relatively stable.

He also noted that tariffs are both inflationary and growth-dampening, and reiterated his belief that independent monetary policy produces better long-term outcomes. While he didn’t offer a clear stance on the path of interest rates, he said it was too soon to judge, which pushes back on current market pricing that shows a 65% chance of a rate cut in June.

Overall, today’s commentary suggests Fed officials remain cautious and unconvinced by market optimism for near-term easing, especially amid renewed inflationary pressures from tariffs.

Looking at the currency markets, the US dollar moved higher today, reversing some of the sharp declines seen yesterdy. :

• EURUSD. The EURUSD fell back below its rising 100-hour moving average at 1.14323. There is a modest tilt to the downside technically at least in the short term. Stay below in the new trading day and work through the 200-hour moving average of 1.13797 (and moving higher) would add to the bearish bias. The last time the price traded below its 200-hour moving averages back on April 2.
• GBPUSD: The GBPUSD also moved lower but is closing above its rising 100-hour moving average of 1.3311. The current prices trading at 1.3329. Like the EURUSD it would take a move below its 100-hour moving average to give the sellers more confidence. The high price from last week’s trading at 1.3292 be a another target on the downside followed by the rising 200-hour moving average of 1.3228.
• USDJPY: The theme of the 100-hour MA continues with the USDJPY. It is testing near its falling 100-hour moving average at 141.61. Move above and the falling 200-hour moving average of 142.406 would be targeted. The last time the price traded above its 200 hour moving average was back on April 9.
• USDCHF: The USDCHF was the first of the major currency pairs to have the price correction move through both its 100-hour moving average (at 0.81398), and its 200-hour moving average (currently at 0.81609). The USDCHF bottomed yesterday at 0.80412 after trading as high as 0.8874 on March 31. That is a fall of over 800 pips. The room to roam on the topside with swing highs from last week at 0.8230, 0.8239, and 0.82695 as the next targets.

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

IMF Managing Director Georgieva says biggest priority for global agenda is to resolve trade tensions

• IMF is reviewing how it conducts surveillance of countries’ economies, and designs conditionalities for lending programs

• IMF is looking at countries that have repeated lending programs, cites Argentina, Egypt and Pakistan

• IMF will be looking at role of fund and how it cooperates with other elements of the global financial safety net

• New global policy agenda will put more attention on structural reforms that are pro-growth, put private sector in driver’s seat

***

The IMF is staring down the barrel of many, many EM economies coming to it for help as trade flows dry up due to Trump tariff polices. Hence Georgieva’s focus on resolving trade.

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

Via oilprice.com:

—

Expectations I had seen centred on:

• Headline crude -0.8mn barrels
• Distillates 0.0mn bbls
• Gasoline -1.4 mn

This data point is from a privately-conducted survey by the American Petroleum Institute (API).

• It’s a survey of oil storage facilities and companies
• The official report is due Wednesday morning US time.

The two reports are quite different.The official government data comes from the US Energy Information Administration (EIA)

• Its based on data from the Department of Energy and other government agencies
• Whereas information on total crude oil storage levels and variations from the previous week’s levels are both provided by the API report, the EIA report also provides statistics on inputs and outputs from refineries, as well as other significant indicators of the status of the oil market, and storage levels for various grades of crude oil, such as light, medium, and heavy.
• the EIA report is held to be more accurate and comprehensive than the survey from the API

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

Argentex, in a London Stock Exchnage statement :

• said it had been “exposed to significant volatility in foreign exchange rates, particularly in relation to the rapid devaluing of the US Dollar against other major benchmark currencies which has been precipitated by the various recent announcements from President Trump regarding tariff policies and US government spending cuts”.
• “As a result, the company has experienced a rapid and significant impact on its near-term liquidity position, driven by, inter alia, margin calls linked to its FX [foreign exchange] forward and options books.

Here is the source for more.

***

This is not just about exposure, but the lack of liquidity even when trying to reduce such exposure. Order book and interest liquidity dissipated due to the capriciousness-driven tariff volatility.

This is not normal reserve currency behaviour.

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.

• Non-GAAP adjusted EPS 0.27 vs 0.38 expected
• GAAP EPS 0.12
• Gross margin 16.3% vs 15.9% expected
• Operating margin 2.1%
• Adj net income of $934m vs $1.431B exp
• Tariff landscape will have larger impact on energy business compared to autos
• Plans for new vehicles, including more affordable models, remain on track for start of production in H1 2025
• Automotive revenues down 20% y/y

Shares are slightly lower initially.

The company said:

Uncertainty in the automotive and energy markets continues to increase as rapidly evolving
trade policy adversely impacts the global supply chain and cost structure of Tesla and our peers.
This dynamic, along with changing political sentiment, could have a meaningful impact on
demand for our products in the near-term. We remain committed to expanding our business
model to include delivering autonomous robots across multiple form factors and use cases –
powered by our real-world AI expertise – to our customers and for use in our factories, as we
navigate these headwinds.

Here is a look at “changing political sentiment”.

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