Global supply chain problems and geopolitical concerns may have triggered debate among businesses about reshoring production closer to home, but the numbers tell us a different story. Reported euro area reshorings have steadily declined after being surpassed by offshorings in 2019, suggesting global supply chains remain deeply integrated
We've been here before, but prospects of a peace deal in Ukraine are starting to show in FX. CEE FX is holding last week's gains, and EUR/CHF is now also edging back above 0.93. Lower energy prices should be supportive for the euro. Further progress on peace discussions and potentially a softer Fed Beige Book on Wednesday could see EUR/USD hold 1.1500
The Asian session saw a shaky start as US President Donald Trump posted on his Truth Social account that Federal Reserve Governor Lisa Cook will be removed effective immediately.
The immediate reaction saw a gauge of the US dollar retreat as much as 0.3% and gold rose as much as 0.6% to around $3385/oz.
After the very fragile post-FOMC rebound, Friday's session saw American indices (notably techs) extend their recovery, aided by more measured remarks from Donald Trump, who said “there’ll be flexibility” on reciprocal tariffs.
As markets assess the implications of the Zelenskyy-Trump clash on Friday, the focus today is whether US tariffs on Mexico and Canada will go ahead. The FX market is not pricing in 25% duties as a base case, and still leans in favour of either smaller tariffs or another last minute deal. Downside risks for CAD and MXN are therefore sizeable.
