Risky assets are mostly rising firmly today after President Trump announced talks with Russia on Ukraine, while talking down Ukraine's maximal demands.
- The major news driving financial markets right now is President Trump's announcements that talks will begin with Russia on ending the Ukraine war. President Trump said he is hopeful for a peace agreement and that it is unlikely Ukraine will regain all its territory under any settlement, which seems to be a clear indication that the USA will not back Ukraine's demands for a full Russian withdrawal. This raises the prospects for some kind of peace deal, even if it is ultimately an unstable one, and this news is boosting risky assets right now and sinking the Japanese Yen and the US Dollar.
- Despite the generally stronger risk-on sentiment in the market, there is a headwind from yesterday's US CPI (inflation) data, which came in a fraction higher than expected, ticking up from an annualized rate of 2.9% to 3.0% despite a widespread expectation that the rate would be unchanged. This has changed expectations of Fed rate cuts, with the market now seeing it as likely that the Fed will hold rates steady throughout the rest of 2025. This would normally boost the US Dollar and knock US stocks but the effect is minor overall due to the Russia news pulling the market in the other direction.
- UK GDP data released a while ago strongly beat expectations, showing month-on-month growth of 0.4% while growth of only 0.1% was expected. This has given an extra boost to the British Pound, putting the GBP/USD currency pair in focus today.
- Swiss CPI (inflation) data came in as expected, showing a month-on-month decline of 0.1%.
- In the Forex market, the British Pound is the strongest major currency, while the Australian Dollar is the weakest. The EUR/USD currency pair is in secondary focus as the announcement of talks between the USA and Russia relieves some pressure on the Euro.
- Gold has again begun to rise well above $2,900 after reaching a high above $2,942 yesterday. Trend traders will probably still be interested in being long of Gold now, and many analysts see a profit target at the next big round number of $3,000.
- Coffee rose yesterday but did not reach a new high, after having risen by more than 16% in just three weeks and traded at a new all-time high price. Although Coffee futures can be expensive, retail traders and investors can gain exposure to Coffee via the COFF ETF, although US taxpayers should beware this is probably a PFIC for tax purposes.
- New Zealand Inflation Expectations data released earlier shows the rate is expected to be 2.06%, a fall from last month's 2.12%.
- There will be a release of US PPI an Unemployment Claims data later today.
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