Market attention is firmly focused on the incoming tariffs imposed by the USA. This week will see the imposition of tariffs on China, Mexico and Canada. China will receive a 10% tariff, while the full 25% tariff on Mexico and China may be negotiable. European and other global tariffs remain in the pipeline. European leaders are calling for a massive increase in defence spending, following events in the Whitehouse last week, with the resulting strains in USA/Ukraine relations. Manufacturing PMI out of Europe and the US was soft, while EU inflation jumped higher, although not as severe as was expected. The USD dropped sharply, allowing the EUR to regain 1.0500, while the GBP leapt to 1.2700.Australian Manufacturing PMI was also soft, while an inflation gauge showed weaker than expected inflation, ahead of the release today of the latest RBA minutes. The softer reserve allowed the AUD to rebound back towards 0.6250, while the NZD broke back above 0.5600, boosted by an improvement in local terms of trade data. Markets are keenly focused on developments on global trade.
