Market reaction to the much-anticipated US-UK trade agreement was cautiously positive, though not particularly enthusiastic. While major US equity indices closed higher overnight, DOW, S&P 500, and NASDAQ all gave back early gains to finish near their opening levels, suggesting that the initial optimism faded as details of the deal emerged. The muted tone suggests that while the deal provided a headline boost, its content lacked the depth to drive a more sustained risk rally.
The trade agreement itself, though billed as comprehensive, turned out to be more of a framework than a finalized deal. No formal documents were signed during the Oval Office event, and US President Donald Trump admitted that “final details are being written up,” promising a conclusive announcement in the coming weeks. Crucially, the 10% blanket tariff on UK imports will remain in place, setting a potential precedent that future US trade agreements—whether with the EU, ASEAN, or Canada—may not revert to pre-tariff norms. This signals a structural shift in global trade architecture where tariffs are normalized, not reversed.
Despite the lack of concrete outcomes, Sterling has remained resilient and is currently the second strongest major currency so far this week, trailing only Dollar. Japanese Yen holds third place, while Kiwi, Loonie, and Euro sit at the bottom of the performance chart. Aussie and Swiss Franc are trading near the middle.
Attention is now shifting to Canada, where April employment data will be released later today. After a surprise job contraction in March, markets are looking for a modest 4.1k rebound in hiring. Unemployment rate is expected to edge up to 6.8%. With inflation risks rising and growth facing external pressure, both from tariffs, BoC is being pulled in opposite directions. Whether it prioritizes stabilizing inflation or supporting the labor market will depend heavily on how data trends evolve in the coming months.
Technically, USD/CAD’s break of 1.3903 resistance confirms short term bottoming at 1.3749, on bullish convergence condition in 4H MACD, just ahead of 1.3727 fibonacci level. Further rise should be seen to 1.4150 cluster resistance (38.2% retracement of 1.4791 to 1.3749 at 1.4147). Reaction from there would decide whether fall from 1.4791 is a three-wave corrective move, or a five-wave impulse.
In Asia, at the time of writing, Nikkei is up 1.60%. Hong Kong HSI is up 0.24%. China Shanghai SSE is down -0.14%. Singapore Strait Times is up 0.73%. Japan 10-year JGB yield is up 0.034 at 1.359. Overnight, DOW rose 0.62%. S&P 500 rose 0.58%. NASDAQ rose 1.07%. 10-year yield jumped 0.0987 to 4.373.
Japan wage growth slows while Real incomes shrink, but spending rebounds
Japan’s wage data for March showed a softening trend. Nominal total cash earnings rose 2.1% yoy, below expectations of 2.4% yoy and down from February’s 2.7% yoy. This marked the 39th consecutive month of nominal wage growth, but the pace is clearly losing momentum.
More concerning was the continued decline in inflation-adjusted real wages, which fell -2.1% yoy, down for a third straight month, highlighting the squeeze on household purchasing power as consumer prices remained elevated at 4.2% yoy, particularly for food staples like rice.
Base salaries (regular pay) grew 1.3% yoy, unchanged from February, suggesting underlying wage trends remain stable but not accelerating. However, overtime pay, often viewed as a proxy for labor demand, fell -1.1% yoy, marking its first decline since September and the sharpest drop since April last year.
Despite the income pressures, household spending surprised to the upside. It rose 2.1% yoy, far exceeding the expected 0.2% yoy and marking the first increase in two months. On a seasonally adjusted month-on-month basis, spending climbed 0.4%. The increase was largely driven by higher electricity bills and rising education-related expenses.
China’s exports surge 8.1% yoy in April, ASEAN shipments jump 20.8% yoy, US slide -21% yoy
China’s exports surged 8.1% yoy to USD 315.7B in April, far exceeding expectations of 1.9% yoy. However, the headline strength masks key shifts in trading patterns.
Exports to the US tumbled by -21% yoy, a sharp reversal from March’s 9.1% yoy gain, reflecting the drag from elevated tariffs. In contrast, shipments to the ASEAN bloc jumped 20.8% yoy, with Vietnam, often seen as a transshipment route for Chinese goods, seeing a 22.5% yoy rise.
Yet, with the US now eyeing a steep 46% tariff on Vietnamese imports and imposing a 10% baseline levy, this channel for China could soon come under pressure.
Elsewhere, exports to the European Union also improved, rising 8.3% yoy.
Imports dipped just -0.2% yoy, a much smaller contraction than the expected -5.9% yoy. As a result, trade surplus narrowed from USD 102.6B to USD 96.2B, above the expected USD 94.3B.
EUR/USD Daily Outlook
Daily Pivots: (S1) 1.1181; (P) 1.1259; (R1) 1.1305; More…
EUR/USD’s corrective fall from 1.1572 resumed by breaking through 1.1265 and intraday bias is back on the downside. Deeper fall would be seen to 38.2% retracement of 1.0176 to 1.1572 at 1.1039. But strong support should be seen there to bring rebound. On the upside, break of 1.1380 will suggest that the correction has completed, and bring retest of 1.1572.
In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0808) holds.
