Markets have had a few days to digest the EU-US trade deal reached on Sunday. The biggest mover so far has been the Euro, which faced lows of $1.15 yesterday after having fallen 1.5% so far this week. Weakness in the common currency was enough to briefly push the Dollar currency index back above 99 for the first time in over a month during yesterday’s session. Staying with the Dollar, traders only have a matter of hours to wait before the Fed comes to a decision on the next interest rate target and while the outcome is unlikely to be anything other than a rate hold, there are growing rumours of dissent among the ranks. A number of board members, including Waller and Bowman, are becoming increasingly vocal about the need to lower rates.
From today onwards, the economic calendar will shift up a gear. The aforementioned Fed decision is worth keeping an eye on, but traders are facing a packed schedule from here until Friday. The ADP employment change, while often at odds with NFP data, may upset markets later today. Thursday’s PCE Price Index is another big event, but pales in comparison to Friday’s Non-Farm Payrolls. A reminder that Microsoft (MSFT) and META report earnings later today, while Apple (AAPL) and Amazon (AMZN) report tomorrow.
Geopolitical events are also beginning to resurface, as president Trump launched an ultimatum at Russia to end the war in Ukraine within the next 10-12 days. The declaration includes threats of hefty tariffs on US trading partners who continue to import Russian oil, leading to potential supply woes. Crude oil has climbed 6% since Monday, with Brent futures pushing $72.50 a barrel and WTI now over $69. Such sanctions will mostly affect the likes of India and China, further complicating ongoing trade negotiations with the US.
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