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U.S. President Trump’s plans to impose higher tariffs on steel and aluminum imports encountered some pushback from politicians and business owners, easing fears that a trade war could ensue.

This follows a barrage of tweets from the Donald, insisting that Canada should first give way to their NAFTA demands so that those tariffs won’t be imposed.

  • U.S. final Markit services PMI unchanged at 55.9
  • U.S. ISM non-manufacturing PMI down from 59.9 to 59.5 vs. 58.9 forecast
  • White House source: Trump “could amend his initial announcement”

Major Events/Reports:

Upbeat ISM non-manu PMI

The mood was a little less negative in Monday’s U.S. session as the ISM non-manufacturing PMI posted a better than expected reading of 59.5 versus the estimated 58.9 figure.

Although this was lower compared to the earlier 59.9 reading, it still showed a stronger pace of expansion than expected and was actually at its highest level since August 2005.

Underlying data revealed that the prices component dipped from 61.9 to 61.0 while the employment component tumbled from 61.6 to 55.0, which signals weakness in both inflation and hiring.

On the flip side, business activity and production advanced along with new orders. The backlog of orders was also higher, which suggests that businesses could ramp up production to fulfill all these.

Return of risk appetite?

Wall Street was off to a shaky start, coming off a gloomy mood in the previous trading session. However, those frowns turned upside down right around the time of the ISM non-manufacturing PMI release and on growing opposition to Trump’s tariff plans.

  • Dow 30 index closed 336.70 points higher to 24,874.76 (+1.37%)
  • S&P 500 index is up 29.69 points to 2,720.94 (+1.10%)
  • Nasdaq is up 72.84 points to 7,330.71 (+1.00%)

Bond yields were also in the red for the first few hours of the session but made a decent rebound to chalk up gains by the end.

  • U.S. 5-year yield rose 1.7 basis points to 2.2645%
  • U.S. 10-year yield climbed 1.8 basis points to 2.882%
  • U.S. 30-year yield rose 1.5 basis points to 3.155%

Gold returned some of its safe-haven gains while crude oil ticked higher.

  • Spot gold is down to $1319.85 (-0.22%)
  • WTI crude oil futures rose to $60.61 per barrel (+2.22%)

Major Market Mover(s):


Unfortunately for the Loonie, not even higher oil prices or easing trade war jitters were enough to prop it higher as Trump remained adamant on his NAFTA demands.

USD/CAD kept advancing to 1.2927, CAD/JPY is down to a low of 81.37, EUR/CAD popped up to a high of 1.6021, AUD/CAD rallied to 1.0116, and NZD/CAD is up to the .9400 area.


Sterling continued its ascent as Prime Minister May’s speech reassured that the U.K. can set an example to the rest of the world with a Brexit deal.

GBP/USD surged to a high of 1.3878, GBP/JPY bounced off a low of 145.09 to a high of 147.12, EUR/GBP dipped to a low of .8885, and GBP/NZD rallied to the 1.9150 area.

Watch Out For:

  • 12:30 am GMT: Australian current account balance (deficit to widen from 11B AUD to 12.3B AUD)
  • 12:30 am GMT: Australian retail sales (0.4% expected, -0.5% previous)
  • 3:30 am GMT: RBA interest rate decision (no change from 1.50% expected)