(Reuters) - A look at the day ahead in U.S. and global markets by EMEA markets breaking news editor Amanda Cooper.
It's looking very much like another "risk-off" day for the markets today, where stocks, the dollar and commodities are down, while bond prices are ticking up and safe-haven currencies like the Japanese yen and the Swiss franc are enjoying a rally.
The sugar rush earlier this week from the U.S./China trade truce seems to have given way to a sugar hangover. Traders seeking another hit will now be scouring data on U.S. consumer spending and various surveys of regional business activity, while also hoping to hear soothing words from Fed Chair Jerome Powell.
The Reuters markets team is here to provide you with all the information you need to start your day.
Today's Market Minute
* Republicans in the U.S. Congress advanced major elements of President Donald Trump's budget package on Wednesday, as key committees approved tax cuts that would add trillions of dollars to the U.S. debt, while cutting spending on healthcare for the poor and disabled.
* U.S. President Donald Trump said on Thursday that the United States was getting very close to securing a nuclear deal with Iran, and Tehran had "sort of" agreed to the terms.
* Elon Musk's political action committee failed to pay registered swing state voters as promised during last year's U.S. election in return for signing a petition or referring other voters, according to a proposed federal class action lawsuit.
* Oil barely garnered a mention from U.S. President Donald Trump during his glitzy visit to Saudi Arabia this week. But the black gold may explain why the trip went so smoothly. Find out why in Reuters’ columnist Ron Bousso’s latest piece.
* China’s soybean imports recently dipped to a 12-year low, but top supplier Brazil’s latest export volumes to China have hit all-time highs. So how does this all fit together? Reuters’ columnist Karen Braun breaks it down.
ANOTHER WON BITES THE DUST
Every U.S. administration for decades has indicated it maintains a strong dollar policy. It's no secret that Trump's administration wants a weaker currency to help grease the wheels as it seeks to get the rest of the world to buy more U.S. goods and services.
The flipside, of course, is that a weaker currency will drive up the cost of any imported goods and services, thereby heaping more pain on a U.S. consumer that already face a hit from tariffs - even if these levies are not currently at the eye-watering levels Trump first floated as part of his April 2 "Liberation Day" tariff bonanza.
Against a basket of currencies, the dollar has fallen 7% this year, which puts it on course for its biggest annual decline since 2017, when the index fell almost 10%. However, the dollar index might not be the best representation of what is happening with the U.S. currency right now.
The index was established in 1973 by the Federal Reserve as a basket of the currencies of six large U.S. trading partners and currently includes the euro, the Japanese yen, the pound, the Canadian dollar, the Swiss franc and the Swedish crown.
The six biggest U.S. trading partners now are Canada, Mexico, China, Germany, Japan and South Korea. A simple average of the year-to-date decline of the dollar against those currencies is roughly 5.6%, although this does not take into account any kind of weighting based on trade.
Trump would like to see a number of currencies appreciate against the dollar and, Asian exporting nations could be among the candidates.
Currency markets got something of a bombshell on Wednesday in the form of reports that South Korean and U.S. officials sat down last week to talk trade and discuss the dollar/won exchange rate. Cue a rip higher in the Korean won, which has already strengthened by more than 5% since April 2, as it heads for a third straight daily gain.
As ever with markets, these things rarely happen in isolation. The move in the won has shades of the unprecedented rally in the Taiwan dollar earlier this month, which surged 6% in two days, clocking its largest single-day percentage gain since the 1980s.
The parallels between the two has given rise to speculation that the Trump administration might shift its gaze to the FX market and put pressure on its trading partners to allow their currencies to appreciate in value, thereby removing some of what the president perceives as an unfair advantage.
Big exporters tend to like big currency weakness. Haggling over import duties on various goods and services can bring mutual benefits to both parties, even with the compromises that inevitably come along with that process.
FX, however, is a lot more binary. If one side of a currency pair depreciates, the other must appreciate and that might be a tougher pill to swallow.
Chart of the day
Walmart is going to be in sharp focus today. The world's largest retailer delivers first-quarter earnings, and investors will be anxious to see how the company is dealing with tariffs, trade ructions and consumer boycotts.
The Arkansas giant is one of just a handful of large companies that has not either pulled or slashed its forecasts as it seeks to navigate Trump's tariffs. China is Walmart's largest supplier, and the company has pledged to keep prices low to beat its rivals. Walmart has run into trouble with some shoppers after the company, like many other U.S. firms, said it would roll back its diversity, equity and inclusion practices in line with Trump's executive order. Footfall at its stores, and at rivals Target and Costco has declined.
Today's events to watch
* Federal Reserve Chair Jerome Powell speaks at a conference in Washington.
* New York Fed May manufacturing index
* Philadelphia Fed May business index
* April retail sales, producer price index data
* Walmart Q1 earnings
(Writing by Amanda Cooper; Editing by Anna Szymanski)
