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The US ambassador to Canada said Trump and Carney are trying to iron out a framework for a trade and security
agreement, according to ambassador Peter Hoekstra.

I guess they’re not a secret anymore if he’s announcing it in Canada’s largest newspaper.

Hoekstra said that top deputies are ‘being held under a cone of silence’ but that Trump and Carney are also speaking:

“The indications that they are talking and in communications regularly
is a clear indicator to me that both sides recognize the importance and
the urgency of moving this forward.”

The talks are solely between Canada and the US, not including Mexico:

Mr. Hoekstra said the Canadians and Americans are “laying out the
perimeters” of a deal that could involve boosting US content in autos,
improving US access to Canadian critical minerals and ensuring Canada
plays a much bigger role in the Arctic. The talks also include
increased defence spending, energy, border security, fentanyl as well as
steel and aluminum.

We have been indicating this could come all week but this is the strongest sign yet.

There is a remarkable lack of self-awareness here:

“This is too important for it be managed by leaks. There is too much at
stake. You are our second largest trading partner,” he said.

The timeline for a deal is unclear. Reports this week said it could come before the June 14 G7 but Hoekstra din’t offer any timeline, besides to say it could be earlier or later than September.

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

The satellite imaging company surged more than 50% on Thursday, catching a tailwind from solid quarterly results.

Shares of Tesla are down 4.5% today as the fallout from Trump and Musk continues:

• Would have won Pennsylvania without Musk
• He disappointed
• He hasn’t said bad about me but that will be next
• I don’t know if we’ll have a great relationship anymore
• We said no to Musk’s NASA choice

“Elon and I had a great relationship. I don’t know if we will anymore,” Trump said.

“He knew every aspect of this bill. And he never had a problem until right after he left…I’m very disappointed with Elon. I helped him a lot,” Trump said.

There is a lot riding on the June 12 robotaxi event. Indications remain that Elon has badly tarnished the Tesla brand, at least in some markets.

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

• Prior decision
• Deposit facility rate 2.00% vs 2.00% expected
• Prior 2.25%
• Main refinancing rate 2.15% vs 2.15% expected
• Prior 2.40%
• Marginal lending facility 2.50%
• Prior 2.65%
• Inflation is currently at around the 2% medium-term target
• Most measures of underlying inflation suggest that inflation will settle at around 2% target
• ECB will follow a data-dependent, meeting-by-meeting approach to determine appropriate policy stance
• ECB is not pre-committing to a particular rate path
• Headline inflation is set to average 2.0% in 2025, 1.6% in 2026 and 2.0% in 2027
• Core inflation is set to average 2.4% in 2025 and 1.9% in 2026 and 2027
• Real GDP growth is seen averaging 0.9% in 2025, 1.1% in 2026 and 1.3% in 2027
• Full statement

The decision is as expected and there’s nothing in the statement that really stands out. The ECB reaffirms that it will remain data-dependent and we’ll see what exactly the degree that will be from Lagarde later.

As for the latest staff projections, there’s no notable change to the economic forecast and core inflation for the most part. Headline inflation is revised a little lower but the ECB attributes that to “lower assumptions for energy prices and a stronger euro”.

EUR/USD is broadly unchanged at 1.1423 currently after the decision and statement.

This article was written by Justin Low at www.forexlive.com.

• Front-loading of imports makes judging economic activity difficult
• Expects reversal of import surge in the coming months to signal larger price increases
• Non-traditional data says might be seeing some moderation in growth but not a significant slowdown
• Core services inflation still above pre-pandemic rate, progress on core goods has reversed
• Warn notices of layoffs have ticked up since the start of the year, as have layoff mentions in Beige Book

She sounds cautious on the economy but still not in a rush to cut rates.

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

The Trump administration signed a proclamation Wednesday suspending entrance to the U.S. for citizens from 12 countries.

It’s still very early in the quarterly cycle so the numbers are volatile.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 3.8 percent
on June 5, down from 4.6 percent on June 2. After recent releases from
the US Census Bureau, the US Bureau of Economic Analysis, and the
Institute for Supply Management, the nowcasts of second-quarter real
personal consumption expenditures growth and real gross private domestic
investment growth decreased from 4.0 percent and 0.5 percent,
respectively, to 2.6 percent and -2.2 percent, while the nowcast of the
contribution of net exports to annualized second-quarter real GDP growth
increased from 1.36 percentage points to 2.01 percentage points.

I wouldn’t get too excited about this.

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

Palantir CEO Alex Karp said the artificial intelligence arms race with between the U.S. and China will culminate in one country coming out on top.

CFO Andre Schulten said more details about the job cuts will be shared on the company’s fiscal fourth-quarter earnings call in July.

Gold looked like it might break out earlier today on strong European and Asia buying but the selling has been steady in US trade and picked up in the last two hours.

The reversal coincides with a turn higher in US Treasury yields and optimism about US-China trade following a call between Trump and Xi. There were no meaningful announcements following the call but the sides agreed to a round of meetings led by top deputies. The market is optimistic that it means the path to lower trade tensions is intact.

Gold has largely been a trade war barometer this year with prices exploding after the ‘Liberation Day’ tariffs and hitting an all time high at $3500. Prices backed off after Trump delayed them but gold has held above pre-tariff levels. Gold could also be getting a boost from Ukraine and Iran angst and US deficit concerns.

Today’s price action is disappointing for the bulls though. Yesterday I highlighted the importance of breaking the May high of $3437 in order to extend the uptrend.

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