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Bloomberg is reporting that the US (I assume the Trump administration) may ask the Supreme Court on Friday to keep the tariffs intact.

Meanwhile, as European traders look to exit, the down – labs has turned negative with the index now down -114.5-0.27% at 41982. The S&P is up by 5.55 points or 0.09%. The NASDAQ index is up 69.23 points or 0.36%.

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

Axios Ravid is x-ing on comments from Israeli Netanyahu and potential issues:

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

Canada PM Carney, has stuck his toe in the Trump water, by saying that Canada is still being hit by unjustified US tariffs on steel and autos. You never know what the reaction may be.

The USDCAD is lower on the day, but has seen a modest rebound off the lows. Looking at the hourly chart, the price low reached 1.3784 which was support at 1.3781 and then the 100-hour MA at 1.3775. The price remains below the 200-hour MA at 1.38351.In between sits the 38.2% of the May trading range at 1.38107.

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

• Prior month +6.1% revised to 5.5%
• Pending home sales for April -6.3% versus -1.0% estimate
• pending home sales index 71.3 versus 76.1 (revised from 76.5)
• Sales are down -2.5% year over year
• The 30-year fixed mortgage rate is near 6.98% which is putting a brake on sales

Regionally,

• Northeast -0.6%
• West -8.9%
• Midwest -5%
• South -7.7%

NAR Chief Economist Lawrence Yun,

“At this critical stage of the housing market, it is all about mortgage rates. Despite an increase in housing inventory, we are not seeing higher home sales. Lower mortgage rates are essential to bring home buyers back into the housing market.”

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

WH economic advisor Peter Navarro on Bloomberg:

• There is no question, this is an economic emergency
• Nothing much has changed due to the trade ruling
• Initial measures on China were targeted on Fentanyl imports
• What the US has done already is perfectly appropriate
• USTR Greer will clarify potential administrative actions during the appeal of the trade court ruling. The announcement will come soo.
• The administration has a number of different options on trade
• On the tax bill, the CBO is historically bad at estimating tax bills impact.

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

• Prior estimate -0.3%
• GDP 2nd revision -0.2% versus -0.3% expected
• GDP deflator 3.7% versus 3.7% expected and 3.7% preliminary
• Core AC prices 3.4% versus 3.5% estimate and 3.5% preliminary
• PCE prices preliminary 3.6% versus 3.6% preliminary
• PCE ex food, energy and Housing 3.3% versus 3.4% preliminary
• PCE ex energy and housing 4.1% vs 4.2% preliminary
• Sales preliminary -2.9% versus -2.5% advanced release
• Consumer spending +1.2% versus 1.8% advanced release

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

• Prior was 227K (revised to 226K)
• Continuing claims 1919K vs 1894K expected
• Prior 1903K (revised to 1893K)

Nothing worrying here as the data continues to show a steady labour market. The continuing claims data pertains to the NFP survey week and it just made a new cycle high. That could translate into an uptick in the unemployment rate. Note that the data could get revised the next week though.

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

ECB poll:

• All 81 economists surveyed by Reuters expect the ECB to cut deposit rate to 2% on June 5.
• ECB to pause in July according to 71% of the economists
• note majority among economists for timing of next ECB deposit rate cut after June, but at least one more expected.
• Eurozone economy to grow 0.9% and 1.1% in 2025 and 2026 (versus 0.8% and 1.2% in the April poll.

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

• Judges’ decision on tariffs will be overturned
• Trump administration has different options on tariffs
• Tariff ruling will not affect ongoing trade deals
• Still expects more trade deals in the coming weeks
• Three trade deals are basically done, ready for Trump decision as of last week

You wouldn’t expect anything less as Trump will go down fighting if he has to on pushing forward with these tariffs. The appeal will still take some time to play out but you can bet Trump will want it to be fast tracked. And if not, he will push it to the Supreme Court otherwise. We’ll now have to see if the ruling will be upheld or not in due time.

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

Headlines:

• Dollar gains abate as traders digest what’s next for Trump tariffs
• Cheatsheet on how Trump could sidestep the US court ruling and implement tariffs – MUFG
• India trade minister official says trade talks with US are progressing well
• China reaffirms having maintained communications with US since Geneva talks
• Japan prime minister Ishiba reportedly arranging a call with Trump for later tonight
• Japan trade negotiator Akazawa says want to meet with Bessent for ministerial talks
• Russia says there are currently no plans for Putin to speak to Trump

Markets:

• AUD leads, EUR lags on the day
• European equities higher; S&P 500 futures up 0.9%
• US 10-year yields up 2.6 bps to 4.505%
• Gold up 0.3% to $3,300.99
• WTI crude up 0.6% to $62.19
• Bitcoin up 1.3% to $108,754

It was a relatively quiet session with some bank holidays in the likes of Germany, France, and Switzerland. But European markets were still open and the big story comes from overnight as Trump’s reciprocal tariffs was blocked by the US Court of International Trade.

The sectoral tariffs on steel, aluminum, semiconductors, and autos are all still in place though. And Trump is to expedite an appeal in the courts to overturn the ruling, though it remains to be seen if he will be successful on that.

Even if he isn’t, there are still other avenues in which he can go forward with his tariffs plan. Most of that will take months to see through but the quickest one would be to invoke Section 122 from the Trade Act of 1974, allowing for 15% tariffs for 150 days. But we’ll see what his response will be later.

The dollar was higher in Asia trading but has more or less surrendered all of the early gains in European trading.

EUR/USD was down to 1.1210 earlier but is now back up to 1.1275, down just 0.15% on the day. Meanwhile, USD/JPY was up around 146.00 to start the session but is holding closer to the 145.00 mark now – up just 0.14%. Elsewhere, the dollar is also trading near flat against the pound, franc, and loonie with marginal changes against the antipodes.

The check back in the dollar also sees gold recover early losses to be up now, just above the $3,300 mark. The low earlier today touched $3,246 for the precious metal.

In other markets, equities are holding firmer but have also eased up on the early gains. S&P 500 futures are up 0.9% but were up as much as 1.6% earlier in the session. European indices are also higher but the gains are nothing to shout about with the DAX seen only 0.1% higher at the moment.

All eyes will be on what Trump’s response will be as markets are digesting what the future will hold on his tariffs plan. I’ll be off tomorrow for a personal day but I’ll catch you guys again next week. Have a good end to the week and wonderful weekend, everyone!

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

India trade minister official says trade talks with US are progressing well and that he expects a good outcome soon. We’ve been waiting for a trade deal with India for several weeks as it’s been said to be the first one to come. Eventually, UK took the place.

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

Leading up to the session, USD/JPY traded back up towards 146.00 before gradually slipping back to around 145.20 levels on the day. The pair is still up some 0.3% today but the gains are nothing to really shout about compared to earlier. The same goes for EUR/USD, which traded down to 1.1210 at the lows but is now up to 1.1275 on the day.

The US Court of International Trade may have ruled to block Trump’s reciprocal tariffs but it doesn’t mean it’s the end of that. Trump will appeal the decision and surely fast track the motion in the courts to try and get the ruling overturned. And as you would expect in Trump fashion, he will be loud about it and reaffirm strong belief in winning the appeal.

Some background on this from earlier:

As a reminder, the US Constitution gives Congress the power to impose tariffs but much of this power has since been delegated to the Executive Branch (led by the president) since the Trade Expansion Act of 1962. This means that the Executive Branch can call the shots on tariffs without the need for Congressional approval. And so, courts have allowed for the Executive Branch to retain this authority – at least until today when the latest ruling above is out.

So, that is what Trump is trying to challenge it would seem. I’m no legal expert but some hot takes on the situation is that the court decision is likely to be upheld.

However, Trump does still have other avenues to pursue if he really still wants to go forward with tariffs as seen here.

That being said, all other avenues are going to take a much longer time. That can range from anything between six months to a year. And while awaiting that, the supposed reciprocal tariffs should rightfully not be collected.

In turn, that marks a loss of income for the government in a time when the bond market is already signaling some degree of uneasiness when it comes to the US deficit. So, what becomes of Trump’s plans for tax cuts now too? That’s another point to consider in all of this.

And as much as Trump is going up against the world with tariffs, the fight against China continues to be one that he is especially adamant on winning.

What is disguised by tariffs is certainly further steps in the decoupling between the US and China. And in time, we will get heavier sectoral tariffs against China and all of that will surely be more evident. But for now at least, his plan has hit a snag.

On the one hand though, all of this might ease concerns about inflation at least. And that will perhaps make the Fed’s job a little easier in the short-term. But if Trump continues to pursue tariffs down other roads, it’s still going to be an issue for the central bank either later this year or early next year. So, the can is just being kicked down the road in that regard.

But also from a political perspective, how will all of this play into Trump’s image heading into the midterm elections in November next year?

In a time when the world moves on from one issue to another so quickly, it’d be easier for Trump to create chaos now and likely be forgotten by next year. But if we are still facing the issue of tariffs with potential impact on the US economy for Q2 or Q3 next year, that’s not going to be a good look for Trump going into the midterms. And that will be something that he has to consider as well.

There’s so much at stake and in essence, there’s even more uncertainty for markets to deal with now. There is scope for some short-term reprieve but depending on Trump’s response, the initial reaction we’re seeing might not hold in the big picture.

In any case, there’s no doubt Trump’s plans have hit a bit of a roadblock for the time being. But a diversion doesn’t necessarily mean a change in course at the end of the day. So, keep that in mind.

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