News

Federal Reserve Bank of Cleveland President Beth Hammack speaks before the Money Marketeers of New York University

• Supports ongoing quantitative tightening (QT), a slower drawdown pace will allow longer process
• Fed’s balance sheet has shrunk from $9T to $6.8T since QT began in 2022

• Money market liquidity still appears abundant

• Supported Fed’s recent slowdown in balance sheet drawdown

• Some volatility in overnight markets is not a bad thing

• Sees possible cases for return to Fed repos depending on market conditions

• There are costs for keeping Fed’s balance sheet too large

• Supports work to strengthen standing repo facility

• Costs of too-large balance sheet include market risk taking

• Does not comment on economic outlook

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

Trump spoke from the Oval Office:

• Trump says it depends on China how soon tariffs can come down
• More on Trump threatening higher tariffs on Canadian car imports

Earlier, from minions, placing a cross hairs back on the EU:

• Trump admin says the EU fine on Meta and Apple will not be tolerated

Globex is trading fairly subdued, just above the gap open from around 24 hours ago:

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

South Korea BOK Manufacturing BSI remains at 68 in May

Trump threatens higher tariffs on Canadian car imports, escalating trade tensions

• warned that the existing 25% tariff on Canadian car imports could be raised
• pushing his interest to bolster U.S. auto production and reduce dependence on foreign-made vehicles
• “We don’t want your cars … we want to make our own”

**

Canada is a major auto exporter to the U.S., with highly integrated supply chains under the USMCA trade pact.

A tariff increase would likely spark sharp Canadian retaliation and potential legal challenges under USMCA rules.

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

The USD/JPY pair trades near the 143.00 mark on Wednesday, up over 1.2% on the day, extending its rebound from midweek lows. The Greenback’s gains are driven by improving risk appetite and signs that US-China trade tensions could ease.

The AUD/JPY pair was seen around the 91.00 zone in Wednesday’s session, staging a modest intraday advance ahead of the Asian session. Despite the bounce from earlier lows, the pair retains a bearish overall tone, capped by key moving averages and a sluggish momentum backdrop.

The Mexican Peso (MXN) registered modest losses against the US Dollar (USD) on Wednesday amid an improvement in risk appetite and regained confidence in the Greenback as US President Donald Trump denied that he would remove Federal Reserve (Fed) Chair Jerome Powell.

Trump says 25% tariff on cars from Canada could go higher:

• we don’t want cars from Canada
• has spoken to Canadian Prime Minister Carney, we’ve had nice conversations
• working on a deal with Canada
• dollar is a bit on the low side
• not considering changes to auto parts, auto tariffs (contradicting this from earlier: The FT is reporting that Trump will exempt carmakers from some US tariffs )

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

Gold prices plunged more than 2.50% on Wednesday as risk appetite improved due to a possible de-escalation of US-China tensions and US President Donald Trump’s statement that he doesn’t plan to fire Federal Reserve (Fed) Chair Jerome Powell.

Trump says it depends on China how soon tariffs can come down:

• have spoken to 90 countries regarding tariffs already
• over the next 2 – 3 weeks will set tariff for China
• If we don’t make a deal, we’re just setting the price, then they can decide if they want

• China is not doing any business with us — rate is still 145%

• I have not called Federal Reserve Chair Powell, may call him

Trump’s remarks coming after an executive order signing ceremony in the Oval Office. The orders were related to education.

*

Trump spoke yesterday after the market close. I had someone ask why he didn’t provide such bullish comments during market hours. The answer is that he gets more bang for his buck with comments at times of low to zero liquidity.

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