Markets continue to trade in a tighter range than last week, while haven assets continue to rally in the background. Gold (XAU) broke the $3,300 barrier for the first time yesterday and has sustained that move. Gold is now up 28% for the year, following a 27% rally in 2023.
Perhaps unsurprisingly, Trump was bullish about the first set of formal international trade negotiations. Japan’s chief negotiator arrived yesterday for face-to-face talks with Trump and his negotiating team. It was reported that currency discussions were not part of the conversation, easing concerns that Japan would be pressured to strengthen the yen. USD/JPY rallied 0.7% in the wake of the meeting. Consensus is building that the US will seek to strike deals with several nations to collectively pressure China, and countries are rushing to the negotiating table before the paused tariffs come into effect.
Today, we have the ECB meeting, where a 25bps cut is well priced in. Focus will be on Lagarde’s press conference afterward, though she is not expected to offer much guidance given the uncertain economic outlook.
Tomorrow is a public holiday across several parts of the world—but not in Japan, where CPI will be released in the early hours.
