Ahead Today
G3: US durable goods orders, Conference Board consumer confidence index, eurozone consumer confidence
Asia: China industrial profits
Market Highlights
Several governments from the European Union have signalled that they would like to quickly reach a deal with the US to avert Trump’s threat of 50% tariff. The 50% tariff on EU has been delayed till 9 July from 1 June, providing both sides a bit more time for trade talks. Meanwhile, Japan’s trade negotiator has also indicated that he aims to conclude trade talks with US ahead of a June meeting between Prime Minister Ishiba and President Trump at the G-7 summit.
During a speech by ECB President Lagarde, she has mentioned that global fragmentation and a shift from multilateralism will pose challenges to Europe’s export-oriented economy. However, she has also seen an opportunity to strengthen the euro’s global role as a reserve currency, which could help lower borrowing costs for businesses and shield the bloc from sanctions
That said, the euro currently accounts for about 20% share of global currency reserve, still far behind the US dollar at 58%. It won’t be able to gain reserve status by default. It could achieve that through improving geopolitical credibility via strengthening trade networks and military alliances, as well as improving economic and institutional strength.
Regional FX
In Asia, KRW and PHP fell 0.3% against the US dollar yesterday, while TWD and MYR gained 0.3%. Several other Asian currencies had a relatively quiet session, with both UK and US markets closed for a public holiday.
Singapore’s industrial production rose 5.9%yoy in April, from 6.8%yoy in March. Notably, electronics production increased by 15.2%yoy, while semiconductors production was up by 11.7%yoy. On a sequential basis, seasonally adjusted industrial production rose 5.3%mom, from a 2.7%mom drop in March.
Thailand exports rose 10.2%yoy in April, partly driven by firms front-running US tariff. Thai exports to the US rose 23.8%yoy. Elsewhere, shipments to China rose 3.2%yoy, those to ASEAN increased by 15%yoy, while shipments to EU were up by 6.1%yoy. Commerce Minister Pichai has said that the Thailand-EU free trade agreement will be finalized by year-end. This could help support Thai exports at a time of heightened trade policy uncertainty.
