Euro Trade Deal Panic May Be Overdone: 3-Minute MLIV

Currency Market Analysis - Euro weakness is observed, reversing gains after reaching a three-year high, influenced by dollar weakness and anticipation of a trade deal [1][2] - The pound initially experienced a relief rally following the UK trade deal announcement but later faced concerns about increased costs [4] - The pound fell below $1.34, considered low despite a recent high of $1.38, but it was the best-performing G10 currency yesterday [9] Trade Deal Impact - The trade deal is perceived as more expensive for companies than before, with a 15% cost increase exceeding the previously expected 1% [3] - Market reaction to trade deals may be overdone, with uncertainty about whether they are ultimately beneficial for Europe or detrimental to the US [4][5] Economic Data and Central Bank Meetings - Key central bank meetings, including the Fed, are anticipated as potential catalysts to shift the current narrative [6] - Crucial US data, including inflation and jobs reports, will be important for assessing the US economy's performance and the impact of tariffs [7] - EU GDP data and the Bank of England decision next week are being priced into the pound, influencing the euro [8] Earnings and Equity Market - Strong earnings results are observed from banks like Barclays, indicating a bullish outlook on the equity side [11] - Big tech earnings this week will be crucial for assessing the equity story and the vulnerability of the S&P rally [12] - Value stocks, particularly the Footsie 100, are outperforming the Stoxx 600 and the S&P in terms of year-to-date returns [12]