Created
: 2025.05.01
2025.05.01 20:59
It feels like a fairly 'normal' day is unfolding across markets for once. US stock futures are higher on the back of solid earnings data from the tech sector while hopes for progress on trade are also supporting sentiment, Scotiabank's Chief FX Strategist Shaun Osborne notes.
"US equity futures are firmer while much of Europe is closed for the May Day holiday. Treasurys are marginally firmer. The USD has firmed up but remains within recent ranges, capped by resistance around the 99.85 area still for the DXY. The JPY is underperforming following the BoJ policy meeting. While markets look calm, the broader backdrop for the USD remains fragile. Seasonal factors may mean more headwinds for stocks in the coming weeks but the USD typically experiences a weaker trend through the middle of the year as well."
"The sharp decline seen in the USD so far suggests this may not be a 'typical' year for the USD but persistence in the soft USD tone would fit with the outlook for slower growth, lower corporate earnings and continued diversification away from the USD in the next few months. US Q1 GDP data was weak in headline terms but there were some redeeming features 'under the hood', such as strong real final demand. Overall, though, even these more positive points could reflect anticipatory, pre-tariff activity (consumption, inventory build) that does not detract from the weak outlook for the US economy ahead."
"President Trump remarked that China was having 'tremendous difficulty' with tariffs. But a report from a Chinese news source indicated that it was the US who is reaching out to China to discuss trade. Chinese officials have said that reciprocal tariffs need to be removed before any sit down can take place. Lack of movement on US/China trade will bolster concerns that US growth will slow while inflation could pick up meaningfully in the next few months. This morning's Manufacturing ISM data may reflect some of these trends, checking market optimism."
Created
: 2025.05.01
Last updated
: 2025.05.01
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