Forexlive European FX news wrap: Markets less optimistic after Trump’s interview with Time | Forexlive

It’s been a relatively quiet session until the Time magazine released its interview with President Trump. At first we saw a quick algo driven spike to the upside as “Trump: China’s Xi has called him” headlines started to pop up. That was faded almost instantly and the markets reversed as more and more headlines started to filter through.

The risk-off flows began to mount with two key remarks as the likely culprit. The first one was his answer to the
question whether he would consider it a victory if the US still had
high tariffs by the end of the year like 20% or 30% or 50%. He replied
“total victory”. Not exactly encouraging.

The
second one was when he said that he won’t call President Xi unless Xi
calls him first. It’s been made clear by now that the Chinese won’t call
first, so if this is the strategy, then they could remain at a
standstill for a long time until the economic damage becomes big enough
to force Trump to fold.

I
don’t think the latter is the reason because he also said that Xi has
called him and the markets don’t believe him anyway at the moment given
that the Chinese keep on repeating that they haven’t had contacts. We
can’t know who is lying between the two, but there’s too much
uncertainty on this topic to bet money on it.

Just this morning we got the Chinese Foreign Ministry saying that China and US are not having any consultations or negotiations on tariffs.

Watch out for the weekend tariff headlines as Trump and many other heads of state will be in Rome for the Pope’s funeral.