European FX Open - May Day, ISM under the spotlight

The USD starts the day largely firmer though the commodity bloc is faring better than the bigger majors, (YEN, EUR and GBP) buoyed by materially firmer US stock futures, led by the +1.4% NASDAQ.

As the DXY USD Index threatens to retest the psychological 100.00, seemingly improved diplomacy, conciliation from the Trump admin could well be continuing to be behind such moves.

Sources suggest the US and Ukraine reached a deal over access to Ukraine’s natural resources. Treasury Secretary Scott Bessent told Fox News that the deal is a signal to Russian leadership.

Trump told NewsNation there’s a “very good chance” of striking a trade deal with China and on US terms and also cited potential agreements with South Korea, Japan, and India.

USTR Jamieson Greer told Fox News the US is close to announcing the first tranche of trade deals. Bbg reports Japan will hold talks with the US today; the EU is said to be planning to present a package next week and the US President said newly elected Canada PM Mark Carney plans to visit the White House within the next week.

However, state media suggests Trump’s admin has been seeking contact with Beijing to initiate talks on the massive tariffs Washington has imposed on China, while Bbg also reports Trump barely repelled a challenge to his global tariff offensive in the Republican-controlled US Senate as the president’s trade policy stokes public fears of inflation and recession.

USD/YEN's march to a 13 day best of 144.25 was also part inspired by the BOJ. As expected, the central bank left its benchmark rate unchanged at 0.5%, but also pushed back the timing for reaching its inflation target due to uncertainties from US tariff measures as well as cutting its GDP forecasts.

It's May Day and with much of Europe off the data floor is taken by Swiss retail sales and UK mortgage approvals and the UK manufacturing PMI this morning.

US hard data watch continues with the ISM and initial claims. The former is seen slipping to 47.9 in April vs 49.0 the month previous, but the market is likely mulling downside risk, particularly after that Dallas Fed manufacturing activity (-35.8) shocker earlier in the week.

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