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NYT report citing ‘more than half a dozen current and former advisers and others familiar with Mr. Trump’s thinking’:

• the president would like to strike a wide-ranging deal with Xi, beyond just trade
• Would go beyond commitment to buy US goods
• Would also include nuclear weapons security

The Australian dollar has rose on this but it’s a good sign for risk assets in general and underscores the idea that Trump doesn’t really want to use tariffs.

This article was written by Adam Button at www.forexlive.com.

• If ever there are tariffs brought in Canada, our response will be immediate and strong but we don’t want that

CAD is virtually unchanged today but there was some slight selling on this, though I’m not sure why. Last at 1.4210.

See: Canadian election polls take a big turn as Mark Carney surges

This article was written by Adam Button at www.forexlive.com.

Oil prices could rise on the latest comments from Putin, who said the latest attack on the Caspian Pipeline Consortium is “impossible to restore quickly” because western equipment was damaged.

The pipeline moves Kazakhstan oil to world markets and has been reduced by 30-40% after a drone attack at a pumping station in southern Russia. A 30% decline would represent as much as 380k bpd.

It’s not a big surprise after Novak yesterday said repairs could take several months.

WTI rose yesterday and is up 73-cents to $72.58 today.

This article was written by Adam Button at www.forexlive.com.

• I was informed on results of Russia-US talks
• I appreciate them highly
• Now work on diplomatic missions will be resumed
• Russia ready to get back to negotiations on Ukraine
• We don’t need mediators
• Russia and the US made steps to cooperate in the Middle East
• Russian and the US discussed energy

There’s a common refrain that Russia is pretty much getting everything it wanted in Ukraine but I wonder if Russia isn’t offering something else in the Middle East — maybe in relation to support for Iran — that is below the radar.

In any case, WTI crude oil is up 77-cents to $72.62 today.

This article was written by Adam Button at www.forexlive.com.

• Prior was 1.499m (revised to 1.515m)
• Starts -9.8% vs +15.8% prior
• Building permits 1.483m vs 1.46m expected
• Permits +0.1% vs -0.7% prior

There has been some volatility in this data set in the multi-family side but single-family authorizations in January were at a rate of 996,000, unchanged from the revised December figure of 996,000.

Some troubling signs are emerging, Toll Brothers reported earnings late yesterday and had this to say:

“While demand was solid in our first quarter, we have seen mixed results
so far this spring selling season,” said CEO Douglas Yearley.
“Although demand has remained healthy in many of our markets and
particularly at the higher end, affordability constraints and growing
inventories in certain markets are pressuring sales – especially at the
lower end.”

Home builder sentiment hit a 5-month low in yesterday’s NAHB survey and home builder stocks have been struggling since December.

This article was written by Adam Button at www.forexlive.com.

Stock markets in the US, UK and Europe are all hitting record highs and the mood is buoyant. The US is cutting regulation and optimism is high. You would be mistaken if you think that rising tide lifts all boats.

The anchor of the market since the election has been housing-related, due to higher mortgage rates and the Fed pivot back towards neutral along with expectations for higher deficit spending.

The XHB home builder ETF struggled in December and has flat-lined since.

Toll Brothers reported earnings late yesterday and shares are down 6% in the pre-market.

“While demand was solid in our first quarter, we have seen mixed results
so far this spring selling season,” said CEO Douglas Yearley.
“Although demand has remained healthy in many of our markets and
particularly at the higher end, affordability constraints and growing
inventories in certain markets are pressuring sales – especially at the
lower end.”

At the bottom of the hour, we get the latest report on US housing starts and the consensus is for a sharp drop to 1.390m from 1.499m. That looks precipitous but it comes after a 15.8% increase in the prior report. It would take a fall below 1.294m to break the late-2024 lows.

This article was written by Adam Button at www.forexlive.com.

Headlines:

• US-EU trade talks one to watch later in the day
• China says willing to work with US to resolve trade concerns through dialogue
• ECB’s Schnabel: We are getting closer to a point where we pause or halt cuts
• ECB’s Panetta: Signs of weakness in Eurozone economy are more persistent than anticipated
• BOJ’s Takata: We have no preset idea on timing, level of future rate hikes
• BOJ’s Takata: Long-term interest rates moving in line with state of Japan’s economy
• UK January CPI +3.0% vs +2.8% y/y expected
• Eurozone December current account balance €50.5 billion vs €34.6 billion prior
• US MBA mortgage applications w.e. 14 February -6.6% vs +2.3% prior

Markets:

• NZD leads, GBP lags on the day
• European equities lower; S&P 500 futures down 0.1%
• US 10-year yields up 2.2 bps to 4.565%
• Gold flat at $2,935.83
• WTI crude up 0.9% to $72.48
• Bitcoin up 1.3% to $96,300

It was a mixed session as markets are taking a bit of a breather this week from all the turbulence since Trump’s inauguration.

Tariff threats remain in the picture but we still have some time to work that out over the next few weeks. For today though, the dollar continues to find itself in a steadier spot on the week. There’s little catalyst in terms of headlines but with yields holding up, it is keeping the dollar afloat as well.

EUR/USD is down 0.2% to 1.0428 with GBP/USD down 0.2% as well to 1.2583. The latter touched a high of 1.2640 during the session after the hotter UK CPI report. However, that has some caveats with a rebound in airfare prices and the introduction of VAT on private school fees skewing the readings. The monthly figures hinted at the opposite, reflecting negative readings in January. So, there’s that.

Besides that, USD/JPY is down just 0.1% to 151.90 despite higher yields while NZD/USD is up 0.2% to 0.5710 but off earlier highs of 0.5730 from after the RBNZ rate cut.

In other markets, European stocks are pushed down as the winning streak since the start of the year looks to be challenged. ECB policymaker Schnabel’s comments about perhaps debating to pause rate cuts is something to note.

As for US futures, things are calmer as they are keeping relatively flat as we await the Wall Street open. Coming up later in the day, there will be US-EU trade talks to watch out for as well.

This article was written by Justin Low at www.forexlive.com.

• Strongly dissatisfied with US tariffs on Chinese goods
• Tariffs undermines normal economic, trade cooperation between the two countries
• Hopes to resolve concerns through equal dialogue and consultation
• Willing to work together to create fair, predictable policy environment for practical cooperation

This is the usual commentary from China, as they are attaching the above as part of a congratulatory message to Howard Lutnick’s appointment as US commerce secretary.

This article was written by Justin Low at www.forexlive.com.

• Prior +2.3%
• Market index 214.9 vs 230.0 prior
• Purchase index 144.0 vs 153.1 prior
• Refinance index 593.6 vs 640.6 prior
• 30-year mortgage rate 6.93% vs 6.95% prior

Mortgage applications slumped back in the past week following a decent start to the new year. Both purchase and refinancing activities suffered declines, leading to the drop as the average rate of the most popular US home loan keeps just under 7%.

This article was written by Justin Low at www.forexlive.com.

• We are getting closer to a point where we pause or halt cuts.
• I think R* cannot be any reliable guide for monetary policy in real time.
• Restriction has come down significantly, up to a point where we can no longer say with confidence that our policy is still restrictive.
• Savings rate has started to come down.
• Domestic inflation is still high.
• Wage growth is still elevated.
• We’ve seen new shocks to energy prices.
• I would exclude a rate increase.
• Services inflation should start to come down in February.
• Many indications are that wage growth will decelerate.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Šefčovič will be meeting up with Trump’s top economic adviser, Kevin Hassett, trade representative, Jamieson Greer, and commerce secretary, Howard Lutnick. They are expected to meet in Washington some time in the afternoon.

There’s going to be a lot to discuss, ranging from steel and aluminum tariffs to oil and gas purchases to reciprocal tariffs involving autos. On the latter, Trump claimed the EU had lowered its tariffs on autos last week but the EU has denied such doing. The current EU tariffs on US cars are 10% and Trump wants it brought down to level terms with the US’ 2.5% tariffs. So, we’ll see on that for one thing.

This article was written by Justin Low at www.forexlive.com.

• Prior €34.6 billion

Slight delay in the release by the source. The seasonally adjusted figure is €38.4 billion for the month of December, bringing the cumulative total for the year 2024 to €419 billion. That is a step up relative to the €241 billion total seen in 2023 as trade conditions in particular are normalising after the Russia-Ukraine conflict.

This article was written by Justin Low at www.forexlive.com.