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The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of currencies, is showing muted gains on Tuesday after soft labor market and consumer sentiment data raised expectations for policy easing.

The USD/CAD pair moves slightly higher to near 1.3855 during North American trading hours on Tuesday. The Loonie pair gains as the US Dollar (USD) ticks higher, with investors turning slightly optimistic on de-escalation in the trade war between the United States (US) and China.

This isn’t a big surprise given the politics and reality in Europe, along with its clout. The US seems to be trying to use the UK as a wedge but all trade negotiations in the EU are tough.

The deadline that matters for Europe is the 90 days after Liberation Day. If the US ramps up tariffs back to 20%, it could quickly turn into a China-like situation.

This article was written by Adam Button at www.forexlive.com.

Major European indices ended the session with mixed results. Italy’s FTSE MIB led the way, rising 1.09%, supported by strength in auto and banking stocks. Reports suggesting auto tariffs may be less severe than expected helped lift sentiment, with notable gains from Stellantis (+4.0%) and Iveco (+2.3%). Banks also performed strongly, including UniCredit (+1.3%), Intesa Sanpaolo (+1.4%), Mediobanca (+3.6%), Monte dei Paschi (+2.7%), and Banca Generali (+2.2%).

Elsewhere:

• German DAX: +0.80%

• UK FTSE 100: +0.55%

• France’s CAC 40: -0.24%

• Spain’s Ibex 35: -0.66%

As European traders wrap up for the day, U.S. markets are modestly higher. The Dow Jones leads with a 0.5% gain, while the S&P 500 is up 0.14% and the Nasdaq is slightly firmer by 0.06%.

U.S. Treasury yields are moving lower across the curve:

• 2-year: 3.666% (-1.9 bps)

• 5-year: 3.783% (-3.1 bps)

• 10-year: 4.181% (-3.5 bps)

• 30-year: 4.661% (-3.1 bps)

Commodities and crypto:

• Crude oil: $60.86, down $1.19 (-1.92%)

• Gold: $3,307, down $36.70 (-1.10%)

• Bitcoin: $94,937, down $100

This article was written by Greg Michalowski at www.forexlive.com.

It comes as drugmakers brace for Trump’s levies on pharmaceuticals imported into the U.S. – his administration’s bid to boost manufacturing in the country. 

Goldman Sachs chief economist Jan Hatzius in a note late last week, htat he is not confident forecasting a level for the dollar:

• “I often dodge questions about the dollar. A large body of academic literature and my own experience as an economic forecaster have taught me that predicting exchange rates is even harder than predicting growth, inflation, and interest rates.”

But …

• “I believe that the recent dollar depreciation of 5% on a broad trade-weighted basis has considerably further to go”

Warns that the dollar continuing to decline will make inflation pressure worse

• but will make US exports relatively cheaper

The U.S. economic slowdown is further compounding the dollar’s woes, and does not see much relative improvement saying that the its not likely that the US economy will outperform.

This article was written by Eamonn Sheridan at www.forexlive.com.

Shipments from China to the U.S. west coast appear poised to drop sharply in May.

Venmo, long viewed as a business laggard for PayPal, is generating much faster revenue growth than the overall company.

U.S. crude oil prices have fallen more than 20% since Trump took office, to below $65 per barrel, making it unprofitable for many companies to drill.

Super Micro blamed lower-than-expected preliminary results on decisions from clients during the quarter.