ForexLive Asia-Pacific FX news wrap: Trump says he’ll announce “major” trade deal Thursday

Trump said he will announce a “major” trade deal on Thursday:

• WSJ - Trump is expected to announce a framework of a trade deal with the U.K.
• New York Times says Trump will announce a trade deal with the UK
• Trump spruiks a major trade deal announcement Thursday morning in Washington

Other

• Chinese Embassy in the US says China will not compromise its principles in trade talks
• Is the Bank of Japan policy board 'split' on when to hike rates again?
• BoJ Ueda: Mindful of impact of rising food prices on underlying inflation
• Pavlov's dog takes US equities higher on Trump's "major trade deal" teaser announcement
• PBOC sets USD/ CNY mid-point today at 7.2073 (vs. estimate at 7.2385)
• Arizona passes bill to establish Bitcoin reserve
• Former BOJ Governor Kuroda supports Ueda’s normalization steps
• NZ PM Luxon says markets remain volatile, but he's confident about NZ economic recovedry
• PBOC is expected to set the USD/CNY reference rate at 7.2385 – Reuters estimate
• U.S. drafting plans for a sovereign wealth fund, though no final decisions have been made
• BoJ minutes: Bank will raise rates if economic and price projections realised
• Barclays says US equities upside difficult. Cites downgrades, recession, erratic policy.
• Goldman Sachs sees the Federal Open Market Committee (FOMC) on an extended pause
• North Korea fires off a ballistic missile
• RBNZ Gov Hawkesby recap - compares Trump tariffs to COVID supply side impacts
• Goldman Sachs expect US inflation to surge higher
• Citadel's Griffin says tariffs a "painfully regressive tax", fueling "risk of stagflation"
• Brazil’s central bank raises benchmark interest rate to 14.75% (Reuters poll 14.75%)
• South Korea's foreign exchange reserves have dropped to the lowest level in five years
• RBNZ gov Hawkesby: Labour market data highlighted subdued nature of New Zealand’s economy
• Forexlive Americas FX news wrap 7 May: Fed and Chair Powell stays noncommitted
• Ukraine considering a shift away from the US dollar, possibly linking more closely to EUR
• US stocks close higher thanks to late comments on chips from Trump
• Trade ideas thread - Thursday, 8 May, insightful charts, technical analysis, ideas

It was a relatively quiet headline day today with just a couple of nuggets.

The Bank of Japan published the minutes of its March meeting. The Bank left monetary policy unchanged at this meeting. There was debate around the policy board table, summarised as:

• U.S. tariff policies are seen as a key downside risk to Japan’s economy. Some BOJ members thus urge caution in tightening policy further.
• Others believe decisive action may be necessary regardless of global risks.

Its unsurprising that there was some debate, with inflation in the country having risen and real rates remaining very accommodative (negative!), but the cautious view prevailed, as it did again at the subsequent meeting on April 30/May1 when policy was left once again on hold.

USD/JPY didn’t do too much upon the release of the minutes, holding near 143.80 and thereabouts before drifting lower on the Trump announcement later.

Trump posted to his own social media app that he will announce a “major” trade deal on Thursday at 10am US Eastern time. US media (New York Times) reports that the trade deal will be with the United Kingdom.

US equity index futures traded higher on Globex on the back of the post from Trump. Across major FX the USD lost some ground alongside.

The Wall Street Journal took a more constrained view, reporting that

• “This announcement is likely just an agreement to start the negotiations, identifying a framework of issues to be discussed in the coming months”.

Markets are responding to Trump more than the WSJ as I update, with US equity index futures extending their gains.