Of Enrique Diaz-Alvarez

Once again, the market reaction of the market forced Donald Trump to recall his excessive statements, this time on the possible dismissal of Federal Reserve, Jerome Powell. The shares, US bonds and the credit market have risen to relieve after his statement that he had no intention of doing so. However, noteworthy, the dollar failed to do the same and eventually closed not far from where it had been closed last week against G10’s bonds, without reaching the fall to a long low -ranking Easter Monday in the midst of low liquidity due to holiday. Latin America coins continue to shine, supported by the general weakness of the dollar and the fact that they avoided the worst of Trump’s proposed duties.

So far, the only evidence we have to evaluate the financial damage caused by “Liberation Day” are business surveys and secondary data. This week we are taking the first critical indication of the state of the economy after duties, as the US payroll report on April is published on Friday, along with a number of additional business climate surveys during the week. In addition, we receive the eurozone’s assessment for the economic growth of the first quarter and the preliminary data on April inflation. Overall, a week full of financial reports after the “Liberation Day” that are expected to some extent leading market transactions, although investors will also monitor any announcements of possible trade agreements by the Trump government.

GBP (British pound)

Last week we had mixed financial data from the United Kingdom. March retail sales were positively surprised, indicating durable domestic demand, backed by yet another strong labor market and wage increased. However, PMI surveys on the business climate were worse than expected, undoubtedly influenced by market turmoil after “release day”. We believe that the relative submissions of the pound to the euro is not justified by fundamental sizes, including high interest rates, the relevant economic independence from Trump’s duties and the prospects for close integration with the EU, and we remain quite positive for the pound.

EUR (euro)

The PMI research on business in the eurozone in April, published last week, was better than expected and suggests that Trump’s damage would be less than in the US. While the activity retreated, we did not notice the abrupt falls recorded in US investigations. Critically, the processing index has recovered since March, though it is not yet at extension levels. It is clear that the economic performance gap between the eurozone and the US has been closed, at least in the short term. April inflation data on Friday should give further clarity about how much margin there is for the ECB to further reduce interest rates, but we note that interest rates no longer drive the common currency as strongly as in the past.

USD (US Dollar)

Although US shares and public bonds recovered strongly last week, the dollar remained almost unchanged, signaling that the US currency has become a kind of escape valve that helps reduce the trade deficit with minimal impacts. Following a series of mixed financial reports of secondary importance for April last week, the April Market Market Exhibition, which will be published on Friday, is probably the first serious indicator of the actual impact on tariffs and the consequent market turmoil. The first -quarter GDP report on Wednesday will also be significant, although most of the impact of duties came after the end of the quarter.

*Chief Financial Risk Officer of International Payment Company ebury