Source: Cointelegraph

Source：FXStreet

Major European indexes outperform U.S. stocks so far this year

Source: Reuters

An emerging trade war between the United States and China could drive US crude exports lower in 2025, for the first time since the pandemic, by reducing access to the Chinese market, according to analysts.

That outlook reflects a potential unintended consequence of President Donald Trump's protectionist policies, running counter to his administration's vow to maximise already record-high US oil and gas production.

The US has grown into the world's third-largest exporter behind Saudi Arabia and Russia, since it lifted a 40-year federal ban on exports of domestic oil in 2015. While US crude exports grew only slightly in 2024, the last time they fell was in 2021, after the Covid-19 outbreak slashed global energy demand.

"International demand for US crude may be peaking out, and this could only further accelerate that," said Matt Smith, an analyst at Kpler.

Rohit Rathod, a senior analyst with ship tracking firm Vortexa, said he expected total US oil exports to slip to 3.6 million barrels per day (bpd) in 2025, from 3.8 million bpd in 2024, as Chinese tariffs keep some US oil grades at home.

China consumes around 166,000 barrels of US crude daily, roughly 5% of all US export cargoes. Some of that could stay on US shores, or be diverted to other markets after Beijing announced retaliatory tariffs this week.

The fall in exports would most likely be made up of medium density types of oil with a higher sulfur content, such as Mars and Southern Green Canyon that are considered medium-sour grades. Those types made up about 48% of the US crude imported by China last year.

Such grades are ideal for US refineries and could easily find buyers domestically — particularly if the United States follows through on its threats to impose new tariffs on Canadian and Mexican oil, analysts said.

"Medium sours are welcome barrels in the US Gulf Coast. Refiners need it," Rathod said.

Most of the rest of China's crude imports from the US were lighter density, lower-sulfur types, such as West Texas Intermediate, which are known as light, sweet grades.

That type of oil could be diverted to European and Indian refiners at competitive prices, analysts said.

The Louisiana Offshore Oil Port handled nearly half of all exports to China last year, according to Kpler.

The company was not immediately available for comment.

Another 25% of US exports to China came from Enbridge's Ingleside, Texas facility, near Corpus Christi, Kpler data showed.

Enbridge's facility will see very little impact since less than 15% of it's historical volumes have gone to China, said Phil Anderson, a senior vice-president at the company.

"The market is very liquid globally for light crude," he said.

Among the top sellers of U.Scrude to China is Occidental Petroleum, which sold at least 13 cargoes of light, sweet WTI Midland there in 2024, according to Kpler.

Occidental did not immediately reply to a request for comment.

For China, the impact is likely muted, as US imports accounted for just 1.7% of the country's total crude imports in 2024, worth about US$6 billion (RM26.65 billion), according to Chinese customs data, and down from 2.5% in 2023.

China had increased imports from Canada by about 30% last year to over 500,000 bpd, thanks to the expansion of the Trans Mountain pipeline. China's appetite for US oil has also diminished in recent years, due to discounted Russian and Iranian oil.

Source: Theedgemarkets

EUR/USD trades broadly sideways around 1.0400 as investors await the US NFP data for January.

The Fed is expected to cut interest rates in the June policy meeting.

ECB’s Cipollone expects the impact of tariffs on China to be deflationary for the Eurozone.

EUR/USD steadies in a tight range around 1.0400 in Friday’s European session as the US Dollar (USD) trades cautiously ahead of the United States (US) Nonfarm Payrolls (NFP) data for January, which will be published at 13:30 GMT. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks lower to near 107.60.

Economists expect the US economy to have added 170K workers, fewer than 256K in December. The Unemployment Rate is estimated to have remained steady at 4.1%. The official employment data is expected to drive market speculation about how long the Federal Reserve (Fed) will hold interest rates at their current levels.

Signs of a strong labor market would boost expectations that the Fed will remain in the waiting mode regarding interest rates for longer. On the contrary, soft numbers would stimulate Fed dovish bets. According to the CME FedWatch tool, the Fed is expected to announce its next interest rate cut in the June policy meeting.

Last week, Fed Chair Jerome Powell said the central bank would make monetary policy adjustments only after seeing “real progress in inflation or at least some weakness in labor market” after the Fed left interest rates unchanged in the range of 4.25%-4.50%.

Investors will also pay close attention to the Average Hourly Earnings data, which is a key measure of wage growth that drives consumer spending. The wage growth measure is estimated to have decelerated to 3.8% year-on-year from 3.9% in December. In the month, Average Hourly Earnings are expected to have grown steadily by 0.3%.

Daily digest market movers: EUR/USD steadies while Euro’s outlook remains uncertain

EUR/USD seems steady at around 1.0400, but the outlook for the Euro (EUR) remains uncertain amid concerns that the Eurozone is likely to feel the pain of higher tariffs by US President Donald Trump. Last weekend, President Trump warned that Europe will definitely face tariffs for not buying enough American goods, but didn’t provide much information.

Analysts at Macquarie said President Trump held back specific tariff threats on the Eurozone because of "the lack of a stable government in Germany and France.” Still, they warned that a US tariff bomb would likely find “fertile ground in the EU” and escalate unresolved issues rapidly into trade tensions, given that “Europe is target-rich”.

In addition to global issues, the Eurozone outlook is also vulnerable because of domestic concerns. Growing risks of economic uncertainty have forced European Central Bank (ECB) officials to guide a dovish monetary policy outlook. ECB’s executive board member Piero Cipollone said in an interview with Reuters on Thursday that all officials agree “there is still room for adjusting rates downwards”.

When asked about the impact of President Trump’s tariffs on the Eurozone, Cipollone said, “If tariffs are imposed on us, the most immediate impact will be on growth”. He also added that tariffs on China would compel it to look to the shared bloc for dumping its goods due to tariffs from the US. Such a scenario will be deflationary for the economy.

Technical Analysis: EUR/USD stays below 50-day EMA

EUR/USD ticks slightly higher at around 1.0400 in European trading hours on Friday ahead of the US NFP employment data. The major currency pair faces pressure near the 50-day Exponential Moving Average (EMA) around 1.0436, suggesting that the overall trend is still bearish.

The 14-day Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, indicating a sideways trend.

Looking down, the January 13 low of 1.0177 and the round-level support of 1.0100 will act as major support zones for the pair. Conversely, the psychological resistance of 1.0500 will be the key barrier for the Euro bulls.

Source: FXSTREET

USD/CAD is stabilizing around key technical support at 1.4300, BBH FX analysts note.

Trade conflict can badly hurt economic activity in Canada.

“Bank of Canada (BOC) Governor Tiff Macklem reiterated overnight that a long-lasting and broad-based trade conflict would badly hurt economic activity in Canada and put direct upward pressure on inflation. This complicates the BOC’s job as monetary policy cannot lean against weaker output and higher inflation at the same time.” 

“Canada’s January labor force survey is the domestic focus (1:30pm London). Consensus sees a 25k rise in jobs vs. 91k in December, while the unemployment rate is expected at 6.8% vs. 6.7% in December. Overall, the labor market remains soft and firms’ hiring intentions are muted.”

“Interest rate futures imply almost 75bps of BOC cuts over the next 12 months that should see the policy rate bottom at the lower end of the BOC’s neutral range estimate of 2.25% to 3.25%. Bottom line: FED/BOC policy trend, risk of all-out trade war between Canada and the US, and the Trump administration’s focus on lowering energy prices support a higher USD/CAD.” 

Source: FXSTREET