Trump Unveils Historic UK-US Trade Framework: Market Access and Duty Relief

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3800-1.4030

Euro                 1.5550-1.5790

Sterling            1.8360-1.8600

WTI Oil (opening level) $61.11

The CAD/USD is opening at 1.3916 ( 0.7186 )

Headlines 

·    Trump announced a trade framework with the UK, calling it a historic achievement, though it stopped short of a full agreement. It offers the US better market access and faster customs for exports, while the UK gets limited relief on auto, steel, and aluminum duties.

·    China’s April Trade surplus rose 8.1% YoY, far more than the +2.0% expected. The surplus for the month totaled USD 96.1 billion, despite US President Trump’s Liberation Day tariffs going into effect earlier in the month. China’s exports to the US fell some 17.6 percent from March levels, with increases to the rest of the world.

·    Family offices in Asia are reallocating portfolios, with some exiting the U.S. entirely in favor of Asia and Europe, especially Hong Kong and mainland China, citing uncertainty and recession risks. This marks a shift from the U.S., once a top investment destination, as investors take profits and seek better valuations elsewhere

·    The focus on trade deals now turns to South Korea and Japan, but Commerce Secretary Howard Lutnick warned these deals will take much longer to finalize than the UK framework. He also sees potential for a deal with India but warns it will require a lot of work. The immediate focus now moves to US-China talks this weekend with Trump urging investors to buy stocks before, leading the market to speculate a reduction in tariffs could be on the cards.

·    Nonfarm labour productivity fell by 0.8% in Q1, and labour costs rose by 5.7%. Oxford Economics attributes the productivity drop to unusual factors, not a trend shift, and the rise in costs doesn't signal faster wage growth.

·    Jobless claims fell to 228,000, below expectations, with continued claims at 1.879 million. Claims are stable despite tariffs, with last week's rise due to NY school spring break. Labour market trends may be clearer by July's FOMC meeting, making June easing unlikely.

Key Points

·    Equities: UK-US deal lifts global stocks; tariff relief hopes drive tech, autos

·    Volatility: VIX drops; uncertainty persists but direction unclear

·    Digital assets: BTC consolidates near $104K; ETH rallies post-upgrade; crypto stocks surge

·    Fixed Income: US yields lift across the curve on strong risk sentiment, weak 30-year auction

·    Currencies: USD firmed on strong risk sentiment and hopes for trade deals, though it softened off local highs overnight

·    Commodities: Easing trade tensions boost sentiment, led by energy