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Merz spoke with CNN earlier:

• German Chancellor Merz told CNN that Europe is seeking greater independence from China

Speaking with Fox now:

• US tariffs are threatening our economy
• We are looking for ways to bring them down

Merz not the only one frustrated with tariffs:

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

German Chancellor Friedrich Merz has signalled a strategic shift in Europe’s economic approach, telling CNN that the continent is actively seeking greater independence from China. The remarks reflect growing concerns in Berlin and Brussels over the risks of overreliance on Chinese supply chains, particularly in critical sectors like technology and clean energy. Merz stressed that this push for diversification is not about economic decoupling but rather about building resilience and reducing vulnerabilities.

The Chancellor also voiced strong concern over the impact of trade tensions, warning that tariffs are inflicting “terrible” damage on Germany’s flagship auto industry. With German automakers heavily exposed to global supply chains, rising protectionism is posing a significant threat to growth and competitiveness. Merz’s comments add to mounting pressure on the EU to respond strategically to the evolving global trade landscape.

On the diplomatic front, Merz revealed that the German Chancellery and the White House have agreed to deepen their coordination on trade policy. The pledge for closer cooperation comes as both sides face common challenges from Beijing’s industrial policies and confront the broader task of maintaining a level playing field in global commerce.

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

Musk-Trump feud is bringing forth some fresh information and opinions.

Trump named in the Epstein files:

And now Trump’s tariffs will bring on a US recession.

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

• Trump says call with Xi ‘reached a very positive conclusion’
• Trump says call with Xi went ‘very well’
• Xi: China and US agree to start a new round of trade talks
• The Trump-Musk divorce is official
• Elon takes off the gloves: Says Trump is in the Epstein files
• US initial jobless claims 247K vs 235K expected
• US April trade balance -61.6B vs -70.0B expected
• Carney and Trump are holding secret talks, US ambassador says
• ECB cuts key rates by 25 bps in June monetary policy decision, as expected
• ECB’s Lagarde: The services sector is slowing
• Lagarde: We are getting towards the end of the easing cycle
• ECB sources: a ‘visible majority’ in ECB meeting expressed preference for holding in July
• ECB officials expect rate cuts to be paused in July – report
• Fed’s Kugler: I continue to support maintaining rate if upside inflation risks remain
• Atlanta Fed GDPNow 3.8% vs 4.6% prior
• Canada April trade balance -7.14 billion vs -1.50 billion expected
• US Q1 unit labor costs revised +6.6% vs +5.7% expected
• US Challenger May layoffs 93.82k vs 105.44k prior

Markets:

• US 10-year yields up 3.4 bps to 4.39%
• WTI crude oil up 52-cents to $63.37
• S&P 500 down 0.5%
• Gold down $19 to $3356
• AUD leads, JPY lags

What a day.

The market moves aren’t anything dramatic but the newsflow was memorable. It started with news from Chinese media that Trump and Xi were on a phone call, something that most were expecting to happen on Friday. That boosted sentiment and we anxiously awaited the readouts. When they came there was some disappointment at the lack of real action, but they set up high-level meetings on what could be a path towards a comprehensive deal.

We also continued to hear reports that the US and Canada were in trade talks, something we’ve been writing about all week. That was confirmed by the US ambassador, though whether there is a deal before the G7 on June 15 is now the question.

The big drama came late in the day as the relationship between Elon Musk and Trump utterly imploded. It started as a fight over deficits but got very ugly, very quickly as Elon said Trump was in the Epstein files and should be impeached. Trump said he was taking away Elon’s subsidies and shares of Tesla closed down 14.3%.

The ECB decision was moderately hawkish as officials teed up a pause in July after 8 straight quarter-point cuts. The market is now priced for just 25 bps more in easing in this cycle. The euro initially rose to 1.1494 but couldn’t climb above the big figure and later gave back 50 pips. Part of that was USD volatility and some ‘sell the fact’ on the US-China talks.

All told, the moves were relatively small on most fronts and the biggest mover was the yen, which roundly declined on falling trade tensions. Eyes now though might move to the US budget bill as Elon fights it. Republicans are hoping to pass it by July 4.

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

U.S. Treasury says semi-annual currency report found no major U.S. trading partners manipulated currency to gain unfair trade advantage in four quarters through December 2024

• No major trading partners met all three criteria for enhanced analysis during review period
• Monitoring list of trading partners whose currency practices ‘merit close attention’ includes China, Japan, South Korea, Singapore, Taiwan, Vietnam, Germany, Ireland and Switzerland
• Ireland, Switzerland added to monitoring list due to large bilateral trade surplus with U.S. and large global current account surplus
• While China is not labeled a currency manipulator amid yuan depreciation pressure, China stands out among trading partners for lack of transparency on exchange rate practices and policies
• Lack of transparency will not preclude Treasury from designating China if evidence suggests it is intervening through formal or informal channels to resist yuan appreciation in the future

The U.S. Treasury’s semi-annual currency report is an official document submitted to Congress that assesses the foreign exchange policies of major U.S. trading partners. Its primary focus is to determine whether any country is deliberately manipulating its currency to gain an unfair trade advantage—typically by undervaluing their currency to boost exports to the U.S. The report is mandated by the Omnibus Trade and Competitiveness Act of 1988 and the Trade Facilitation and Trade Enforcement Act of 2015, which require Treasury to monitor and analyze currency practices globally.

Each report typically reviews economies with significant bilateral trade surpluses with the U.S., material current account surpluses, and persistent one-sided currency intervention. Based on these criteria, Treasury may label a country as meeting enhanced analysis thresholds and place it on a “Monitoring List.” In more serious cases, a country may be formally designated a currency manipulator, though this is rare and politically sensitive. The designation can trigger bilateral negotiations and, potentially, sanctions if corrective action isn’t taken.

While the label “currency manipulator” gets the most attention, the report is also a key tool in the Treasury’s broader oversight of global macroeconomic imbalances. It provides detailed commentary on global FX trends, capital flows, and policy frameworks, and it often signals Washington’s diplomatic posture towards countries like China, Japan, Germany, and others with large external surpluses or tightly managed exchange rates.

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

more to come

• This snapshot from the ForexLive economic data calendar, access it here.
• The times in the left-most column are GMT.
• The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.

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.

Elon is going nuclear with the Epstein accusation.

This divorce just got really nasty.

Trump is definitely taking away those subsidies now. The whole market is rolling over as the President of the United States and the world’s richest man fight.

Tesla shares are now down 16.5%.

This is incredible.

Elon now adds to his post: “Mark this post for the future. The truth will come out.”

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

With Tesla shares down 12% today, Elon Musk has lost $15.8 billion.

Both of them are messaging on their respective social networks:

Elon was “wearing thin,” I asked him to leave, I took away his EV
Mandate that forced everyone to buy Electric Cars that nobody else
wanted (that he knew for months I was going to do!), and he just went
CRAZY!”

He separately wrote:

The easiest way to save money in our Budget, Billions and Billions of
Dollars, is to terminate Elon’s Governmental Subsidies and Contracts. I
was always surprised that Biden didn’t do it!

This is top-notch entertainment and TSLA is way overvalued. There is so much riding on the June 12 robotaxi launch but Elon might not be getting the red carpet rolled out from Texas regulators if he keeps this up.

In terms of actual divorces, the Bill-and-Melinda Gates divorce is going to be a high hurdle. Melinda reportedly got $76 billion but at least they were married for 27 years. Elon and Trump weren’t even together for a year.

In order to surpass the cost of the Gates divorce, shares would have to fall all the way to $226 and that’s surprisingly possible. For what it’s worth, Bill Gates has repeatedly said he’s short TSLA.

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

The range has been fairly tight in US stock markets today but some sellers just took a leg lower after hitting stops below the earlier double bottom.

At 0.4%, the move today isn’t large but it’s disappointing after some seeming progress between the US and China. I warned about a ‘sell the fact’ trade on it as stocks had been climbing all week after there were signs of a call. I think many people (including me) would have liked to see some kind of token shift in policy at the very least.

Tesla is a drag on everything today and is now down 10%.

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

The smoke around a new Canada-US trade deal continues to rise.

This was out earlier today but in case you missed it, the Toronto Sun reporter who initially reported a potential deal at the start of the week now has more details, citing ‘multiple sources’. He continues to suggest that the hope is to get a deal before the G7 meeting on June 15 in Canada.

What we can expect is an announcement that
Canada will increase its defence spending, including potential
participation in the Golden Dome missile defence system. We should
expect the government to show that border security will be a priority
and there will be action on fentanyl.

It’s not a full USMCA extension, which is likely to be tackled later. So while it will add some certainty, more-contentious negotiations are likely starting next summer when the window for renegotiation reopens.

After this was published, the US ambassador to Canada confirmed that ‘secret’ talks were ongoing.

USD/CAD today traded to the lowest since October at 1.3635 but bounced to 1.3660 as the US dollar chops around more broadly.

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

The US ambassador to Canada said Trump and Carney are trying to iron out a framework for a trade and security
agreement, according to ambassador Peter Hoekstra.

I guess they’re not a secret anymore if he’s announcing it in Canada’s largest newspaper.

Hoekstra said that top deputies are ‘being held under a cone of silence’ but that Trump and Carney are also speaking:

“The indications that they are talking and in communications regularly
is a clear indicator to me that both sides recognize the importance and
the urgency of moving this forward.”

The talks are solely between Canada and the US, not including Mexico:

Mr. Hoekstra said the Canadians and Americans are “laying out the
perimeters” of a deal that could involve boosting US content in autos,
improving US access to Canadian critical minerals and ensuring Canada
plays a much bigger role in the Arctic. The talks also include
increased defence spending, energy, border security, fentanyl as well as
steel and aluminum.

We have been indicating this could come all week but this is the strongest sign yet.

There is a remarkable lack of self-awareness here:

“This is too important for it be managed by leaks. There is too much at
stake. You are our second largest trading partner,” he said.

The timeline for a deal is unclear. Reports this week said it could come before the June 14 G7 but Hoekstra din’t offer any timeline, besides to say it could be earlier or later than September.

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