China and United States Can’t Even Agree on Whether Trade Talks Between Them Have Begun – Currency Thoughts
Latest Confusion: China and United States Can’t Even Agree on Whether Trade Talks Between Them Have Begun
April 25, 2025
The dollar is higher this Friday, but U.S. equities opened on a slightly downward note despite better-than-expected Google quarterly earnings reported after Thursday’s session. Dollar gains were led by moves of +0.8% against the yen and +0.7% versus the won. The dollar also climbed 0.4% relative to the Swiss franc and Australian dollar, 0.3% versus the euro and 0.2% against sterling.
U.S. stocks opened lower, nonetheless.
Equity markets in the Pacific Rim today closed up 1.9% in Japan, 2.0% in Taiwan, and 1.0% in South Korea and Indonesia but dipped 0.1% in China where the central bank reaffirmed its commitment to a pro-growth monetary stance but where officials denied President Trump’s assertion that trade talks between the two governments are already underway. Reportedly, China is considering exemptions from its 125% tariff on semi-conductors and some other items. European stocks also climbed for the most part today, led by Spain and Italy.
The ten-year U.S. Treasury yield also marched to a different beat today (down three basis points) than other comparable sovereign debt yields, which have risen by four basis points in Italy, three bps in Japan and Spain, and two bps in Germany and France.
The price of gold, which crested at a record $3,509.90 per ounce earlier this week, extended its subsequent slide by a further 2.1% so far today. Oil lost 0.7%, but the price of Bitcoin is 0.6% firmer.
The Bank of Russia’s policy interest rate was left unchanged at a record 21.0% at the latest scheduled monetary policy review. This expected result kept the level first attained last October after a trio of hikes totaling 500 basis points in the space of three months. The second half of 2023 saw the rate climb 850 bps from a mid-2203 level of 7.5%. A statement explaining today’s action by the central bank acknowledges the high elevation of Russian inflation (10.3% in March versus 2.3% eleven months earlier), which has been caused by a war-induced squeeze on the supply of goods and services to meet basic demand. Global trade tensions are cited as an additional potentially inflationary force, but officials still believe that inflation will recede this year to around 7-8%.
The case for an additional rise in the Bank of Japan’s 0.5% policy interest rate was supported by Japanese March consumer price data released today that showed the core CPI index, which excludes fresh foods, rise back to January’s 3.2% level and core core inflation, which also excludes energy, climb to 2.9% from 2.6% in February and 1.9% last July. The consensus of market analysts, however, still expects the rate to be left unchanged at next week’s scheduled review.
British retail sales in March outperformed expectations, rising 0.4% on month and 2.6% on year, the biggest 12-month increase since December.
The favorable U.K. retail sales report, however, was mitigated by concurrent news that British consumer confidence had declined to a 17-month low this month.
In Euroland as well, consumer confidence weakened to a 17-month low during April as the global trade war heated up.
French business sentiment remained “gloomy” in April, printing at a 2-month low and below its long-term average for a 14th straight time. Weakness was most pronounced in construction, whose subindex fell to a 57-month low, offsetting higher readings in manufacturing and services. The employment component rose to a 3-month high but was still a tad below its long-term average.
Canadian retail sales slid 0.4% in February, but the flash indication for March shows a rebound.
The revised reading of the U. Michigan/Reuters April index of U.S. consumer sentiment was revised 1.4 index points above its preliminary estimate of 50.8. at 52.2, however, the reading still constitutes 33-month low and a very sharp deterioration from last December’s 74.0. This data series exudes the influence of massive Tariffobia. A measure of expected inflation over the coming year shot up to a multi-decade high following America’s so-called “Liberation Day.”
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Japan, Bank of Russia, French business confidence, U.S. consumer sentiment
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