Hopes of a Ukraine/Russia truce as early as this week gave US equities a boost, safe-haven USTs, JPY, CHF, USD pressure midday. While the latter sustained - US yields ended higher, JPY, CHF, USD remained lower - US equities reversed gains.
S&P 500 erased another 0.8% to ~5570. Escalating Canada/US trade developments previewed risks into the April 2 reciprocal tariff deadline, which, despite relatively stable US sentiment, job opening data, kept equities under pressure. President Trump pushed back on US recession risk, saying that the US economy is going to "blow it away," that we will have the greatest markets we've ever had, though equities ignored his confidence.
President Trump will be speaking at a Business Roundtable at 5:00 p.m. NY, but don't expect an equity put, given ongoing tariff/trade uncertainties as well as a looming US government shutdown deadline (Fri). The House is voting on a continuing resolution now, though it already seems behind schedule. The US is reportedly meeting with Russia on Wednesday, Trump to speak with Putin this week (Bloomberg headlines). CAD will get 25% tariffs on aluminum, steel at midnight ET (Tues) and a rate cut, cautious guidance from the BoC (Wed). PLN rate hold, ZAR gov budget due in coming hours.
Ukraine is ready to accept a US proposal for a 30d truce with Russia, subject to the latter's acceptance and implementation, and Ukraine/US mineral resource deal could be agreed soon. Ukraine press service has released a joint statement after Jeddah talks concluded.
Risk improved after the headlines: US equities climbed out of the red, while safe assets, like USTs, CHF, JPY, USD, weakened. US equity moves reversed into the close, given ongoing tariff/trade uncertainties, while other markets await US' talks with Russia. Bloomberg headlines informed that Trump may be talking with Putin this week, that an important meeting with Russia will be held tomorrow (Thursday). It's unclear where that meeting will be held and who will be in attendance.
"A truce, if agreed, is clearly bullish RUB and bearish crude," said CitiFX Wire's Rui Ding
"But, small positive for EUR currency complex, too, as geopolitical risk premium for the region is reduced."
Note that EURUSD ended the NY session above 1.0900.
CE3 traded strong, as well. However, our local trader informed that there have been net CEE outflows over recent days, and some currencies, like PLN, could see more outflows if broader sentiment worsens and the Ukraine deal gets postponed. Read more. Note that the NBP meets on Wednesday (time unknown), but no rate change is expected.
