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Key Points:

• Technical bias signals a reversal could be on the cards.
• BoJ announcements are the key risk event to keep in mind.
• An upwards revision of GDP forecasts could spark a slip.

In light of the fact that the BoJ is going to be thrusting the Yen centre stage in the next 24 hours as a result of its interest rate announcement, it's worth taking a closer look at the USDJPY and what is likely to be on cards moving ahead. In particular, we should be cognisant of the current technical bias and how it will influence the pair's performance given the expectations of the BoJ's impending reports.

Starting with our technical bias, there is a fairly clear picture being painted on the daily chart which suggests a reversal to the downside is warranted. Specifically, even given the sizable rally seen in the prior session, buying pressure failed to push the pair above the 100 day moving average which provides a strong indication that we may have reached a near-term peak. Moreover, both the 12 and 20 day averages are in a bearish configuration which can only add to downside risks for the day to come.

Furthermore, if we take a closer look at some other technical instruments, the likelihood of an imminent slip seems rather substantial. For one, the zone of resistance that the Dollar Yen is currently struggling against falls in line with the 50.0% Fibonacci retracement which is acting as an effective cap on additional gains. In addition to this, the stochastics are moving into oversold territory which suggests that the bulls are exhausted and about to be slapped lower.

From a fundamental perspective, it may be somewhat counterintuitive to expect the Yen to strengthen materially against the USD given the likely content of the BoJ's policy statement and outlook report. The widely recognised inability of the bank to hit its 2% inflation target will almost certainly be reinforcedby the releases which should lead to some modest selling, even though much of this negative sentiment has already been priced in. However, what will likely be of greater interest will be the BoJ's GDP forecast for the coming fiscal year. Indeed, the 1.5% forecast is expected to be revised upwards, in line with the IMF and OECD revisions seen earlier in the year.

In the event we do see a GDP forecast in excess of 1.5%, buying pressure for the Yen should kick in which will drag the USDJPY lower in agreement with the already discussed technical bias. As a result, losses could see the pair as low as 106.86 within a few weeks as the next stage of the descending channel takes hold. Alternatively, if the forecast remains grim, we could see a near-term spike which could bring the pair to the upside of the channel before long-term bearishness resumes.

Ultimately, the outcome of the impending session is likely to come down to what the market weights more heavily out of the inflation or GDP expectations. However, at present, it appears that the GDP data is going to be the only new information injected into the situation which would usually make it the preeminent risk event for the day.

Key Points:

• Price action constrained within a tightening wedge formation.
• RSI Oscillator nearing oversold levels.
• Watch for a move back above 0.7600 before a recommencement of the down trend.

The Aussie Dollar has had a relatively rough week to date as the pair has reacted to a range of wildly swinging sentiment around the USD, as well as a disappointing CPI result. This has provided the conditions for a fairly steady depreciation which has seen price action currently trading around the 0.7519 mark. However, despite the pair's relatively clear corrective structure (4-hr timeframe) there are some indications that we might be seeing the early stages of a turnaround.

Fundamentally, it was always going to be a rough week for the commodity exposed pair given the machinations exiting the Trump white house. It was therefore no surprise that the announcement of a new corporate tax plan would boost the greenback's sentiment. Additionally, the market was also looking for a relatively strong Australian inflation result, yet instead they received a slip to 0.5% q/q. So the fundamental downside pressure was always going to arrive. However, it would appear that the defining factors are likely to be technical in nature over the next 24 hours.

In particular, a cursory review of the charts clearly shows the rising trend line that is currently supporting price action. Subsequently, the lows are getting higher in a sign that should provide plenty of comfort to the bulls. Additionally, both the RSI Oscillator and the ADX are plumbing relatively low levels, with the RSI nearing oversold territory.

Subsequently, there are plenty of reasons to suspect that the Aussie Dollar is about to rally especially considering that, between the higher lows and lower highs we have a wedge formation in play. Given the aforementioned factors, we are likely to see a short term move back towards the 0.7630 mark. However, it is likely that this level could prove a turning point and lead to a continuation move to recommence the depreciation against the greenback.

Ultimately, any upside move is likely to only be a short term one before the pair recommences its steady decline. The technical indicators are relatively clear in the short term given the squeezing that is currently occurring. Subsequently, keep a keen eye out for a break above the top of the constraining wedge as this is likely to signal the start of the short term move back above the 0.76 handle and towards the 0.7630 mark.

STOCKS

The US markets are up ahead of the Tax reform statement from Trump today. Dow (20996.12, +1.12%) looks bullish and could head towards 21200 in the near term. Markets await to see what tax reforms would be done and how and when this would play out.

Dax (12467.04, +0.10%) continues to sustain above 12390 but is close to an immediate resistance near 12532. Only a break above 12532 could bring in further upside and indicate a fresh bull move; else a sharp recovery from 12532 is possible in the near term.

Shanghai (3149.19, +0.47%) is trying to rise from levels above 3100 and if it sustains we could see a recovery towards 3175. Else some sideways consolidation in the 3150-3100 is possible in the near term.

Nikkei (19231.92, +0.80%) is headed towards 19620 in quick succession as Dollar-Yen continues to move up sharply. While there could be some scope of a rise in Dollar-Yen towards 112, Nikkei could be bullish for the coming sessions.

Nifty (9306.60, +0.96%) closed above 9300 in line with our expectation and could face crucial resistance within the 9300-9400 region. This could be a near term top and a sharp fall towards 9100 could follow soon.

COMMODITIES

As mentioned earlier, we see chances of a corrective decline in Gold (1265) that can target 1260-65 at least. Our preferred scenario that the support at 1260-65 will hold is continuing to work well enough for now. The Support region may be expanded to 1239. At the same time, the Resistance at 1305 also looks strong in the near term. As such, we may see some more sideways movement between 1239-1305 early next week.

Silver (17.59) is Oversold on the near-term charts and while the market remains above 17.39, there will be chances of an eventual bounce that can break above 17.80. If that happens on a closing basis, a further rise to 18.33 may be seen swiftly.

Copper (2.57) has been stuck in the range of 2.50-2.67. A close below 2.50 could open up 2.48 and 2.45 levels respectively. Only above 2.67, higher resistances of 2.72 -80 can come into consideration. The bias would remain bearish while it is trading below 2.70-72 levels.

Brent (51.96) is trading within the range of 50-52 while WTI (49.41) is hovering around at our preferred supports of 48.80 levels. If these two rise further due to their near term oversold condition, then 52 levels for Brent and 50.80 levels for WTI would come into consideration .We have U.S Oil inventory data (Forecast: -1.1M Barrels) at 8.00 p.m today, which may add some more clarity towards the price action.

FOREX

The markets wait for Trump to introduce a new tax plan today, cutting the corporate tax to 15% from the existing 35%. Also the BOJ and ECB meet tomorrow can play a crucial role.

Our expectations of a major reversal in Dollar Index (98.78) will be either confirmed or negated within the next 24 hours as the combination of the Trump Tax policy announcement tonight and the ECB meet tomorrow will set the near term path. Chances of a whiplash around the major support of 98.50 before a turnaround can’t be ruled out. While first signal of a bullish rise comes on a break above 99.35, this bullish scenario has to be discarded on a sustained move below 98.50.

Euro (1.0938) is testing the higher resistances of 1.0930-50 contrary to expectations already but it remains to be seen if it manages to rise past and stay above 1.0950. As long as 1.0950 holds, the possibility of a downward correction to 1.07 remains open but on a firm break above 1.0950, the bearish option has to be reconsidered. The picture should be clear by tomorrow.

Pound (1.2840) continues its sideways consolidation in 1.2750-1.2900 with an apparent indifference to the global events and it may remain quiet for the rest of the week too.

Dollar-Yen (111.24) has rallied towards our target of 111.50-112.00 just as expected. Near 112.00 it may stall for a couple of sessions before deciding the next course of action. Immediate support comes at 110.00.

Aussie (0.7515) keeps oscillating in the range of 0.7450-0.7600 as expected but if the interim support of 0.7500 holds today, then a contraction can be seen in the price action which may give birth to a sharp trending move next week, direction unclear at the moment. Wait and watch.

Today’s session is going to be crucial for Dollar-Rupee (64.26). In case the market continues to remain above 64.22-18 AND rises above 64.40, we could be looking at chances of a strong rise in Dollar-Rupee. On the other hand, in case the market breaks below 64.22-18, then a further decline towards 64.00-63.80 may take place. Wait and watch.

INTEREST RATES

The US yields have risen sharply. The 5Yr (1.86%), 10YR (2.34%) and the 30YR (2.99%) are trading higher from 1.83%, 2.31% and 2.95% respectively. Near term looks potentially bullish. The 10Yr could move up towards 2.40% while the 30yr could test 3.0-3.10% in the coming sessions.

The German-US 2Yr (-1.97%) and the 10Yr (-1.96%) have fallen slightly. But we need a confirmed break below -2% to impact the Euro to move on the downside.

The German yields are by themselves heading towards immediate resistance levels and could come off a from there in the early sessions next week.

Crude Oil

Choppy trading in decent ranges was the theme of the overnight session in crude, with both Brent and WTI showing good two-way interest after last week's selloff. When the dust settled though, both contracts closed about 0.50 % higher for the day.

The API's surprise increase in crude inventories and the Russian energy minister wanting more data before committing to a cut extension in June both saw crude under pressure. However, the effect was short-lived, implying that positioning is now much more balanced than it was last week. It gives credence to our theme that the sell-off was driven by excessive short-term speculative longs, rather than a previously unknown structural change in the market.

Both Brent spot and WTI spot remain mired at the bottom of their recent ranges, although the odds have now risen for a short term bounce. Tonight's U.S. EIA Crude Inventories will now be the key to oils direction over the next 48 hours.

Brent spot has support at 51.20 and then 50.80 its 200-day moving average. Resistance lies at 52.50 initially.

WTI spot has support at 48.50, just under its 200-day average at 48.60, with resistance at 50.00.

Precious Metals

Gold

President Trump's tax and economic plans seem to be finally getting some flesh on them, with some detail on corporate tax cuts and the dropping of border tax plans. With diminishing geopolitical tensions and a less itchy tariff finger, this was all adrenaline to the U.S. stock market and greenback, but a sugar crash for gold which fell 17 dollars in the session to 1261.

Extended safe haven long positioning has been the primary driver of gold's rally above 1290 in recent times. But with repeated technical failures above that level and the world an apparently safer place the stage is being set for an apparent technical correction now.

Gold is trading at 1264 in early Asia, just above initial support at 1260. The 200-day moving average lies just below at 1254.35 with the significant longer term support at 1240. A break of the lower level suggests a much larger correction lower from a technical perspective.

Resistance sits at 1277 and 1280 initially, followed by the multi-day highs region around 1295.

Silver

Silver failed at its 200-day moving average at 17.9800 yet again overnight, marking the 3rd failure in a row. In fact Silver had an outside reversal day yesterday, trading above Monday's high before closing below Monday's low, a bearish formation technically. The only bright spot being a hint of bullish divergence with the daily stochastic and RSI.

Silver trades at 17.6230 in early again just above the overnight low at 17.5620 which is now initial support. Behind this, the next support is the 100-day moving average at 17.3790 followed by the 17th March low at 17.2380.

Resistance lies at the 200-DMA at 17.9800, then yesterday's high of 18.0120 and then the April high of 18.6550.

Summary

The charts suggest that the long positioning unwinds in crude oil has run its course for now ahead of tonight's crude inventories. Conversely, the technicals suggest there could be more pain ahead for precious metals as a resurgent dollar and a quieter world undermine the price action in gold and more particulalry silver.

Nearer term $ index outlook :

In the Apr 18th email, once again affirmed the bearish view since the Apr 11th email of declines back to 98.85 (Mar 27th low) and even below. The market has indeed continued lower since, currently testing that 98.85 low. With still no confirmation of even a short term bottom, there is scope for a downside break (see in red on daily chart below). But be warned further such declines may be limited and part of a more major bottoming. In the bigger picture, the view since Jan of at least a few months of wide consolidating, seen as a large correction (wave 4 in the rally from the May 2016 low at 91.90) and with eventual new highs above 103.80 after (within wave 5) remains in place. Note too that lots of support lies just below the 98.85 low at 96.35/60 (falling support line from Feb, base of large wedge-like pattern since Jan, bullish trendline from June 2014) and would be an "ideal" area to form that more important low (see in red on daily chart/2nd chart below). But I do use the term "ideal" as there is still no confirmation of that short term low (and larger bottoms begin with smaller ones) while there is always the potential of a downside acceleration (currently seen as a low risk, but a risk none the less). Nearby resistance is seen at 99.20/35 and the bearish trendline from Apr 10th (currently at 99.75/90). Bottom line : still no confirm of even a short term low, but downside below that 98.85 low may be limited and part of a more major bottoming.

Strategy/position:

Still short from the Apr 11th sell at 100.75. For now with the magnitude of further downside likely limited and part of a more major bottoming, will use an aggressive stop on a close 15 ticks above the multi-day bearish trendline (cur at 99.25/40). This also illustrates the difference between a "view" and a "position". In this case the preferred view is one of limited further downside as part of a potentially more major bottoming. However, there is still no confirmation of even a short term low and there is the potential of a downside acceleration. Though that potential is seen small, remaining short keeps the short position open temporarily while the aggressive stop will quickly get us out if such a downside acceleration does not occur nearby (limited risk).

Long term outlook:

As discussed above, still favor the view that the rangy trade since Jan is a large correction (potential near its completion) and with eventual new highs above 103.80 after. However, such gains above 103.80 (if they do indeed occur) may be limited and part of a more major topping (years ??, see weekly chart/3rd chart below). Lots of long term negatives add to this potential and include negative technicals (see sell mode/bearish divergence on the weekly macd) and the failure to build in the Jan highs above the Mar/Dec 2015 peaks at 100.50/poor upside momentum. Note too that another upleg above 103.80 would be seen as the final upleg in the rally from May 2016 (wave 5) and the final upleg from May 2011 (wave V), while long term resistance lies just above at the ceiling of the multi-year bull channel (currently at 104.75/25). At this point with gains above 103.80 favored, this view of a more major topping is just something to keep in the back of your mind/a longer term risk to be aware of. Bottom line : downside action since Jan seen as a large correction and with an eventual resumption of the longer term gains above 103.80 after (though still no confirmation that the downside is "complete").

Strategy/position:

For now with the market seen in process of a larger bottoming, looking to switch the longer term bias to bullish from neutral. However, with that nearer term scope for further downside/bottoming, would be patient for higher confidence of at least a short term low to switch (larger bottoms begin with smaller ones).

Current:

Near term : short Apr 11th at 100.75, aggressive stop on close 15 ticks above multi-day bear t-line.
Last : short Apr 4 at 100.55, stopped Apr 7 above wk long rising t-line (100.95, closed 101.20).

Longer term : downside from Jan seen as large correction, looking to switch back to bull ahead.
Last: :bull bias Feb 7th at 100.35 to neutral Mar 28th at 99.75.

There has been a huge shift in momentum for the USD overnight, as the market pivots back to Trump protectionism; Trump tax and fiscal spending updates. So much for the Trump trade being dead and buried, as US 10 year yields moved to 2.34%. Equity markets were euphoric with the NASDAQ breaking 6000 for the first time while gold slipped to 1260 as French election risk and North Korea tensions abate.

What initially started off as a post-French election relief rally has turned into a full-out global equity rally. Despite higher US yields, equity investors were ecstatic about the current market narratives, and Wall Street had a stellar day on the prospect of tax cuts being announced on Wednesday, strong corporate earnings and ongoing relief from the French election results.

On the perpetual market rumor mill, there was an ECB leak that implied no changes this Thursday but a possible adjustment in language at the June meeting. A Reuters story citing “sources” claimed that the ECB would send a signal in June towards a reduction in monetary stimulus. The decline in political risk in France was seen as supporting such a move.

The Tump protectionism play saw a stronger dollar against high yielders and commodity currency as market re-visit the US protectionism theme. Traders are viewing comments from US Commerce Secretary Wilbur Ross that stated a 20% tariff on Canadian softwood lumber imports is likely as a litmus test for Trump Protectionism and dealers were quick to sell off currencies with a significant portion of exports derived from the primary industry.

The Canadian Dollar

After cutting my chops on Bay Street (Toronto Canada), I can assure you the softwood lumber dispute is nothing new and has been making headwinds in one form or another since 1982. While the tariff is not economically damaging for Canada, the unnerve and over reaction on the Dollar Canada desks is likely due to the broader NAFTA and political considerations this move may have.

USDCAD Canadian Dollar Lower After Lumber Tariffs

Australian Dollar

Commodity currencies have come under pressure overnight, probably led by the move higher in USDCAD as the US protectionism theme rears its ugly head. However, the AUD has outperformed the CAD overnight post-Trump Canadian Softwood Tax. While risk sentiment is soaring, and with iron ore off its lows we should expect the Aussie to hold above the .7500 level but with today’s CPI the key local major event dealers are anxiously awaiting the news as it could have far-reaching RBA policy implications.

Japanese Yen

USDJPY was one of the best performers overnight, rallying from low 110s to a high of 111.20. With buoyant risk appetite, higher 10 year US yields and traders intrepidity leading the charge. The play is all about the anticipated Trump tax reform as traders continue to clamor for upside exposure

Euro

Huge uptick in two-way volumes overnight. EURUSD continued to be the main attraction as buying accelerated after the Reuters article suggested the ECB could reduce monetary stimulus in June. Removing the easing bias would be supportive of the Euro and even more so as investment flow seeks out relatively cheap European assets and election hedges should continue to unwind.

Trump Administration Playing Hardball Ahead of NAFTA renegotiation

The Canadian dollar is lower against the greenback after early tweeting from US President Trump and a confirmation later by the Department of Commerce on new tariffs against Canadian softwood lumber producers. Commerce Secretary Wilbur Ross said that Canada has been a “generally a good neighbour, but that doesn't mean they don't have to play by the rules”. The US is targeting five Canadian lumber exporters of receiving subsidies making it hard for US producers to compete.

Secretary Ross wanted to get the lumber dispute out of the way ahead of the NAFTA talks which at this point look like a tense affair given the opening salvo by the United States.

Economic data out on Wednesday was not supportive of the US dollar with the Conference Board's consumer confidence index fell to 120.3 after a forecast of 123.7. The drop came after a 16 year high last March at 125.6. Confidence still remains strong, but so far retail sales have not reflected the improved assessment from consumers if they don't spend.

The USD/CAD gained 0.51 percent in the last 24 hours. The currency pair is trading at 1.3588 after the comments from the Trump administration announced a tariff on softwood lumber that could reach 24 percent. Canadian Prime Minister Justin Trudeau reacted by vowing to protect Canadian interests.

The move from Washington had been unexpected as Canada had avoided being in the line of fire of Trump, unlike Mexico and China. The news was specially negative for the CAD ahead of a renegotiation of Nafta. Trump made it one of his campaign promises to tear the deal. He has softened his tone on the trade agreement, looking for a renegotiation now, but echoing back to his inauguration it will be with an America first in mind.

West Texas gained 0.39 percent on Tuesday trading. The price of a barrel of WTI is trading at $49.11 after having traded below $49 earlier in the day. Crude prices have been volatile as investors face uncertainty regarding the effect the Organization of the Petroleum Exporting Countries (OPEC) production cut has accomplished and if a six month extension could offset the ramp in production from US shale producers.

Russia is set to discuss the extension to the deal on May 24, one day ahead of the OPEC general meeting in Vienna. While compliant with the first agreement Russian production is usually slow in the first half of the year so little sacrifices were made. Extending the deal would require sensitive conversations with its largest producers who have already cut 250,000 of barrels of output.

The USD/MXN gained 1.034 percent on Tuesday. The currency is trading 18.9034 after Trump once again tweeted about the Wall along the Mexican border. He wanted to be clear that dropping the funding request from the bill to avoid a government shutdown does not mean he is not still going to pursue it.

The peso also depreciated after the lumber tariffs against Canada were announced as a border tax has been mentioned as a funding mechanism to pay for Trump's Wall. Nafta currencies were higher after the Macron and Le Pen result in the first round of the French presidential elections with crude adding support by ending a multi-session slide only to face Trump caused market turbulence.

Retail sales in Canada and US crude oil inventories will share the spotlight on Wednesday. The market is expecting a drop in retail sales of 0.2 percent while crude is forecasted to show another 1 million barrel drawdown.

Market events to watch this week:

Wednesday, April 26
8:30am CAD Core Retail Sales m/m
10:30am USD Crude Oil Inventories
11:50pm JPY Monetary Policy Statement
Thursday, April 27
Tentative JPY BOJ Outlook Report
Tentative JPY BOJ Policy Rate
2:30am JPY BOJ Press Conference
7:45am EUR Minimum Bid Rate
8:30am EUR ECB Press Conference
8:30am USD Core Durable Goods Orders m/m
8:30am USD Unemployment Claims
Friday, April 28
4:30am GBP Prelim GDP q/q
8:30am CAD GDP m/m
8:30am USD Advance GDP q/q

We're back after the ANZAC Day break in Australia and I wanted to immediately pick up basically where we left off with the Euro.

Flicking through my Euro pair watchlist, it's EUR/JPY that immediately caught my eye this morning, after testing higher time frame trend line resistance at the same time as EUR/USD tests horizontal resistance.

Take a look at the level that EUR/JPY is back testing on the daily chart:

EUR/JPY Daily:

We have spoken about this EUR/JPY confluence of resistance before, and already had the trend line drawn in from that previous profitable short trade.

The French election gap up and rally obviously changed things quick-smart, but as we keep finding time after time, even after these big fundamental shifts, higher time frame technical levels are so often still respected.

Where the Euro goes from here all depends on how the market views which way the second round of French election voting will go. As a trader, the key for us isn't to try to predict the result as such. It's to put ourselves in the best possible position to take advantage of a major market repricing if the predictions are wrong.

With EUR rallying across the forex board, it's pretty obvious to see which direction the market thinks the result is going to go. Do you agree? Then how are you going to trade it?

We've spent the past six months getting to know Donald Trump and a playbook is beginning to emerge. It was evident in the trade as USD/CAD hit a 14-month high on Tuesday. Euro soared ahead on chatter that the ECB may hint at tapering in June. Australian CPI is due up next. The stocks rally stopped out the DOW30 short and USDCAD long Premium trades, while the EURUSD long from Friday hit its final target. 8 of the last 10 EURUSD trades in the Premium Insights since the Dec Fed hike have hit all targets.

Actions from Trump follow a three-part arc. First is the hint, the act itself and then damage control by his staff. The latest example was his spat with Canada over dairy.

He first mentioned Canada last week on a trip to Wisconsin when he said dairy farmers were being treated unfairly. On Tuesday, he slapped tariffs on Canadian lumber as part of the response. Afterwards, Commerce Sec Wilbur Ross downplayed the move and said Canada was a good neighbour.

In terms of trading, the time to sell CAD was on the first mention, even though it didn't include a specific threat. Trump appears to speak off-the-cuff but he's repeatedly show that it's part of an agenda and that was the case with Canada. The time to buy back CAD was shortly after the act itself. The tariffs sent USD/CAD up through 1.36 on Tuesday to the highest since last year when oil was bottoming. The loonie staged a small recovery back to 1.3560 on Ross' comments.

Along with that arc, the pattern has been that the first move from Trump is the strongest. When he bombed Syria, the fear was that it was the start of a campaign, but it's gone quiet since. Expect Trump to move on from Canada now.

As for USD/CAD, Trump isn't the only factor. Oil climbed a half-cent Tuesday but it remains in a downtrend. Meanwhile, the French election result and hopes for a Trump tax cut are the driving force in broader markets.

But if you apply our arc to the tax story, you had the hint on Friday. That was the time to buy risk assets. The 'plan' itself has largely been leaked so that may mark the top. In the aftermath his staff will play down parts of the plan that are unrealistic.

Aside from Trump, Australian and New Zealand traders returned from holiday today and that Aussie Q1 CPI report is on the agenda at 0130 GMT. The consensus is for a 2.2% y/y rise with the trimmed mean up 1.8%. Expect a big AUD move on any miss.

GBP/USD has posted moderate gains on Tuesday, erasing the losses which marked the Monday session. In North American trade, the pair is trading at 1.2830. On the release front, British Public Sector Net Borrowing posted a debt of GBP 4.4 billion, larger than the estimate of 2.6 billion. In the US, CB Consumer Confidence dropped to 120.3, missing the forecast of 123.7 points. There was better news from the housing and manufacturing sectors. New Home Sales rose to 621 thousand, well above the estimate of 590 thousand. As well, the Richmond Manufacturing Index came in at 20 points, above the forecast of 18 points.

On Monday, European leaders met in Brussels to discuss a united front in the Brexit negotiations. Britain wants any deal to include the financial sector, but the Europeans are working on a draft that would exclude the financial sector, it is governed by EU rules. There are also likely to be sharp disagreements over the size of Britain's debt to the EU. For now, the British government is concentrating on the June election, but after that things could get nasty between the UK and the EU. If the Brexit talks run into trouble, that could spell bad news for the British pound.

President Trump will have to reach out to the Democrats in order to avoid a shutdown of the federal government on Saturday. Congress must pass a spending bill which will fund the government until October, but the bill requires the backing of 60 senators. This means that the Republicans (who control 52 seats) will need the support of 8 Democrats. This has led to bipartisan negotiations, and it's reasonable to expect that these talks could go down to the wire, as both sides try to stick to their positions and try not to blink first. The last shutdown was in 2013, lasting 17 days. Another shutdown would be embarrassing for Trump, as it would start on his 100th day in office and would cast doubts on his ability to push his budget and tax plan through Congress.