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US VP Vance:

• US would walk away from Russia/Ukraine talks if Russia not engage in good faith
• Trump is right about Jerome Powell.
• Powell way too late in helping fight back against some trade deals

Meanwhile, German PM Merz and Trump agree in phone call on the need to quickly resolve trade disputes. This according to German government spokesperson

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

The New York Post reports that the US is weighing a plan to slash China tariffs to as low as 50% next week from 145%.

“US officials are discussing a proposal to lower President Trump’s punishing levy on China goods to between 50% and 54% as they begin what promise to be lengthy talks to hammer out a trade agreement, sources close to the negotiations said”

Tariffs on neighbouring south Asian countries would be cut to 25%.

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

White House Navarro is saying:

• UK deal offers template on how they are going to proceed.
• Going to take good care of Boeing
• US – UK digital services terms still in negotiations.
• They will have an alternative arrangement with the UK on steel
• Asked about the EU says retaliation is a mistake

The EU negotiations will be more difficult. EU is speaking about using tariffs on Boeing as retaliation.

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

Crude oil futures are settling at $59.91, up $1.84 or 3.17%.

The low price today reached $57.77. The high reached $60.02. Technically, the price is closing above the 100/200 hour MAs at $58.30 and $59.15. Getting and staying above those MAs gives the buyers some hope with the 38.2% of the move down from the April high at $61.63 as the next target.

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

The US dollar stormed ahead today, particularly USD/JPY which is now up 210 pips to 145.93.

Some thoughts on what’s driving the move:

1) A delayed reaction to the Fed

Powell was hawkish yesterday and the market has priced out about 40 basis points in Fed rate cuts in the past two weeks.

2) The UK trade deal

There is some element of smoke-and-mirrors with the UK trade deal but it’s not devoid of substance. The US has been touting deals and got one here and the market may be anticipating more to come.

3) The art of the deal

I think it’s a preposterous idea to think the US can get away with a 10% tariff floor while asking other countries to bring down trade barriers but maybe I’m wrong. The UK today lowered barriers for imports from the US and accepted — at least for now — a 10% tariff. And that’s with the UK having a trade surplus with the USA. Maybe Trump really is a deal-making magician and he will roll more-meaningful US trade partners as well.

4) Trump sounded better on China

I think this is the big one. He said that talks with China would be ‘substantive’ and that tariffs would come down (though in part because “they can’t go any higher”). It’s not much but it’s a change in tone and an indication that he expects progress this weekend. It’s tough to read the tea leaves on this one but the market is sensing progress.

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

The Catholic Church has elected American Robert Prevost, 69, as its new leader.

He is the first American and the first native-English speaker to be named Pope but also speaks Spanish, Italian, French and Portuguese and can read Latin and German. He has taken the name Leo.

Prevost headed the Vatican Dicastery for Bishops, which is the office tasked with bishop appointments around the world.

“We are often worried about teaching doctrine, but we risk forgetting
that our first duty is to communicate the beauty and joy of knowing
Jesus,” Prevost, in one of his few interviews, told Vatican News.

The publication said Prevost brings to the table pastoral experience in the peripheries with
expertise in navigating the complexities of the church’s central
governance.

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

• High yield 4.819%
• WI level at the time of the auction 4.812%
• Tail +0.7 bps vs 6 month average of -0.3 bps
• Bid to cover 2.31X vs 6 -month avg. of 2.45X
• DIrects 27.21% vs 6 month average of 22.3%
• Indirects 58.88% vs 6 month average of 63.9%

AUCTION GRADE: D+

Domestic demand is higher. International buying is lower. Bid to cover is below average and the Tail is positive and above the -0.3 bps average.

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

The U.S. Treasury will auction off $25 billion of 30 year bonds at the top of the hour. The six-month averages of the key components shows:

• Tail -0.3 basis points
• Bid to Cover 2.45X
• Directs (domestic buyers) 22.3%
• Indirects (international buyers) 63.9%
• Dealers 13.8%

The last auction had a high yield of 4.813%. The current yield is at 4.816% not far from that level. At the last auction, the tail was -2.6 basis points with Bid to cover at 2.43X.

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

A new Pope has been elected.

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

The Trump trade deal with the UK is igniting stocks with the major indices all up by over 1.4%.

The snapshot of the market currently shows:

• Dow industrial average is trading up 576 points or 1.40% at 41688.78.
• S&P index is up 78.23 points or 1.40% at 5709.
• NASDAQ index is trading up 317 points or 1.79% at 18053.90.

The major indices all closed higher yesterday snapping a 2-day decline to start the new trading week.

The NASDAQ index is now up 0.44% for the week while the S&P index is at a similar 0.42%. The Dow industrial average is leading the way with a gain of 0.93%.

The UK deal was somewhat low hanging fruit. Discussions with China this weekend in Switzerland will be more important as will trade deals with Europe, Canada, Mexico. China currently has tax at 145% which has stopped shipments into the US ports and that jobs at the docks and with truck drivers are at risk.

Trump said lower imports represented a $1.1 billion benefit to the US so a “slowdown is the good thing”..

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

Well there it is. Trump is talking like 10% is the floor, answering a big question in the markets.

Now Trump often says one thing and does another but that doesn’t bode well for making many deals.

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

• Would like to see China opened up.
• Expects a friendly meeting with China
• Says he believes discussions will be substantive with China
• China wants to do something, they have to

We will see where this goes but it sounds like tariffs could be lowered this weekend. How much though?

“Well, it could be. I mean, we’re going to see. Right now, you can’t get any higher — it’s at 145% — so we know it’s coming down.”

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