Equity markets stabilised overnight, ahead of the looming tariff deadline expiry for Mexico, Canada and China. The postponement of the tariffs was for one month and this expires next week, so diplomats will be looking for an urgent solution. This, combined with the incoming ‘reciprocal tariffs’ introduced worldwide, could signal a global trade war, or at least tit-for-tat. Markets have not reacted well to this ongoing disruption of international trade but may be sidetracked by inflation readings in the US, with the PCE inflation indicator due to be released tomorrow. The USD holds steady, with the EUR trading around 1.0500, while the GBP looks to regain 1.2700.Commodity currencies are softer, with the NZD testing the downside of 0.5700, while the AUD looks to hold above 0.6300. Australian inflation held steady, with the CPI reading released yesterday, coming in a 2.5%. This was expected to spike upwards, following the RBA’s embarkation on the rate cutting cycle, but remained contained. This is welcome news for the Central Bank and will green light further rate cuts in this cycle.
