- ECB cuts key rates by 25 bps in April monetary policy decision, as expected
- ECB sources report: Decision to cut interest rates was unanimous
- ECB sources: Some members see a high chance of a June cut
- US initial jobless claims 215K vs 225K estimate
- US April Philly Fed business index -26.4 vs +2.0 expected
- Trump has spoken with Kevin Warsh about taking over the Fed Chair - WSJ
- Trump: China has reached out since tariffs
- Trump will sign executive order extending federal hiring freeze until July
- Trump: Federal Reserve Chairman will leave if I ask him to
- Lagarde: Downside risks have increased
- Lagarde Q&A: A number of governors a few weeks ago would have argued to skip a rate cut
- Trump trade deal with Japan is close - report
- Fed's Williams: Does not see the need to change rates any time soon
- Pres. Trump: .Very confident of trade deal with the EU
- Atlanta GDPNow growth estimate for Q2 unchanged at -2.2%
- US March housing starts 1.324M vs 1.420M expected
- Baker Hughes oil rig count +1 to 481
- Italy's economic minister to meet with US Treasury Secretary Bessent on Tuesday
- Anna Paulson is the new Philadelphia Fed Pres. effective July 1, 2025
- Israeli officials recently developed plans to attack Iranian nuclear sites in May
Markets:
- Gold down $15 to $3327
- S&P 500 +0.1%
- US 10-year yields up 5.4 bps to 4.33%
- WTI crude up $1.98 to $64.45
The ECB was the early highlight of the day and the initial reaction in the market was to sell the euro as the statement highlighted downside risks and those were later re-interated by Lagarde. In addition, she highlighted tightening in financial conditions, which could be a path to cut more even though the ECB statement removed a reference to being in restrictive territory. Leaks after the ECB also put a cut on the table for June and the market now implies a 75% chance of a cut.
Despite that, the downside in the euro only lasted for minutes. It hit a session low of 1.1335 right after the decision but the 25 pip decline was quickly erased as the US dollar sold off broadly.
A drag on the US dollar was economic data was the Philly Fed as it tumbled and the new orders component fell to crisis levels. That heightened murmurs from the US freight industry that shipping orders are collapsing. Ultimately, EUR/USD chopped sideways to 1.1367, about where it started US trading.
Otherwise, the US dollar generally softened, particularly against the commodity currencies. The talk of replacing Powell definitely got some attention and led to some bids in the front-end of the Treasury curve. But it's a tough dynamic to take seriously.
Trading slowed in the afternoon ahead of the long weekend and that's carried over so far into Asia-Pacific trade.
