By Enrique Diaz-Alvarez, Chief Financial Risk Officer of International Payment Company Ebury

As harsh financial data in the US yet do not yet show a clear damage to the chaos of duties, financial markets focused mainly on progress news in trade negotiations, which could lead to a reduction in duties.

OR US-United Kingdom Trade Agreement It was simple in details and looked limited, but it was enough to rise the risk assets and to boost, even mildly, the dollar. The weekend’s news that there was “substantial progress” in the US-China negotiations, although also without much details, boosting the future fulfillment and the dollar during the early morning Asian transactions. In addition to the main coins (G10), Latin America coins were reinforced, while those in Asia have retreated from their recent highs, but the moves were limited.

We expect that this week’s attention will be shifted from excessive titles about negotiations on US macroeconomic elements. The April inflation report is expected on Tuesday and is estimated to show a recovery compared to the previous month – although it is probably still too early to capture the impact of “release day” Also noteworthy are data on retail sales and weekly applications for unemployment benefits.

All the basic reports from the eurozone and the United Kingdom relate to periods before the “Liberation Day”, so markets will probably ignore them. Therefore, scheduled lectures by Federal Reserve, Bank of England and the ECB will gain an increased importance this week.

Sterling

Although Bank of England reduced interest rates by 25 MB, As expected, the tone of the meeting was more aggressive than the markets expected, driving, leading the markets to invoice only two more reductions for the rest of the year. The pound was further reinforced by the news of the US-United Kingdom trade agreement. Although the content was limited, the markets seem to have realized that the new commercial regime would have a relatively mild impact on the UK, and sent the pound to the top of the big coins in the week. This week’s employment data, although delayed, are expected positively, with further salaries and job creation.

Euro

Eurozone’s economic reports are the slower in processing from all major economic areas, so we have not yet seen harsh data reflecting the impact of “Liberation Day” – only research. The latter show relative durability, while Germany’s large fiscal expansion package is another reason for optimism. Consequently, market expectations for other three reductions from the ECB and one Low final interest rate just 1.5% reflect excessive expectations For the impact of US duties – implications that may not ultimately be implemented, especially given the most positive climate of recent days on trade agreements. This week there are no significant events in the eurozone, so the euro is likely to move on the basis of developments elsewhere.

US dollar

In addition to investigations, data on impact on US duties remain difficult to find. High frequency data for the labor market indicate that while companies are slow in hiring, there are no significant redundancies. The April data to be announced this week (inflation and retail sales) will be decisive. Inflation is expected to recover from low in March, but duties will have a small role in it, as imports already on the way to the US in April were generally excluded from duties. Similarly, retail sales of imported products probably came from stocks purchased before the new duties. The next inflation measurement may be more revealing, but the high uncertainty highlighted by the Fed last week means that each new element will be considered with particular care.