Trump appoints Miran to the Fed

European markets have kicked off the day with a somewhat cautious tone, with markets failing to gain traction on a day that brings the potential for volatility as the deadline runs out for Russia to end their conflict with Ukraine. For markets, the impending meeting between Trump and Putin over the coming days does provide the basis to expect a more patient approach for the time being, with oil prices falling to a one-month low in a signal that market concerns over a shift away from Russian oil will be minimal. Nonetheless, anyone following previous discussions between Putin and Trump will likely remain somewhat sceptical around the possibility of a breakthrough, raising the chance of more oil volatility.

Trump has made his move on the Fed, with the President replacing the outgoing Adriana Kugler with Stephen Miran who has been holding the role of chair for the White House Economic Advisors. Notably, Miran was one of the architects for the Mar a Largo Accord, which advocated for the use of tariffs and dollar devaluation as a strategy to increase economic output and international competitiveness. From a Fed perspective, this could provide us with greater confidence over the direction of interest rates this year. Miran takes the role on a temporary basis, and thus he is likely to vote for a rate cut in each of the remaining meetings this year.

Today’s main event comes in the form of the latest Canadian jobs report, with traders weighing up the consequences from the ongoing trade spat with their southern neighbours. Coming in the wake of the dour US jobs report that saw huge downgrades for May and June payrolls, we are watching out for a potential continuation of the rise in unemployment seen over recent years. While the USMCA has shielded a large chunk of the Canadian economy from Trump’s tariff, the lack of any breakthrough in trade negotiations do provide the basis for further economic deterioration in Canada.