The USD is largely little changed from yesterday's closing prices, while US stock futures all sit light in the red, led by the -0.5% NASDAQ.

Note USD/CNH has tentatively rebound from Monday's new 2025 low of 7.1845 and retests the 200-dma at 7.2220 last, as the Caixin version of China services and composite PMIs disappointed to the downside, the latter coming in at 51.1 in April vs 51.8 the month previous.

The SHCOMP was a winner though following the Golden Week holidays and after US President Trump said he is willing to lower tariffs on China at some point because the levies now are so high that the world’s two largest economies have essentially stopped doing business with each other. Trump also remarked that his admin could strike trade deals with some countries as soon as this week, offering the prospect of relief for trading partners seeking to avoid higher US import duties.

Meanwhile, the PBOC kept its daily reference rate for CNY little changed at 7.2008, even after the Yuan rallied in offshore trading when the mainland market was closed for holidays.

Also overnight, US Treasury Secretary Scott Bessent touted America as the “premier destination” for global capital and argued that the Trump admin’s policies will solidify that position — countering the so-called sell US theme that panned out in April following Liberation Day.

This morning, Europe will also be preoccupied to an extent with the release of countries' services and composite PMIs and in the second half trade reports from the US and Canada leads. The former's deficit is seen widening to Usd 137.2bln in March as firms boosted imports again to front-load products ahead of tariffs.

There is also ECB and SNB speak scheduled.

On the news front, Friedrich Merz takes over as German chancellor today, pledging swift action to galvanize the economy, buoyed by the mega fiscal boost of the infrastructure and defence spending deal.

A note for returning Londoners, yesterday, there was a a big beat in the US ISM services index in April of 51.6 vs the 50.2 consensus and 50.8 the month previous, as markets continue to be on US hard data watch, but there was a miss in Swiss CPI for April of 0.0% m/m and 0.0% y/y vs 0.0% and 0.3% the month previous. Swiss inflation slowed to the weakest in over four years as the strong Franc drives down the costs of imported goods.

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