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Chicago Fed Pres Goolsbee (Dove, 2025 FOMC Voter) appears to share Gov Kugler's post-US/China tariff truce sentiments in an interview with the NY Times conducted Monday. Namely, he sees the growth/inflation effects as potentially less pronounced than he had previously assumed, but it doesn't change the situation materially for Fed policy. Indeed he suggested that uncertainty may actually have grown as a result of the latest tariff climbdown. 

• Goolsbee per the NY Times "said the temporary nature of the deal and the extent of the levies still in place would weigh significantly on the economy. 'It is definitely less impactful stagflationarily than the path they were on... Yet it’s three to five times higher than what it was before, so it is going to have a stagflationary impulse on the economy. It’s going to make growth slower and make prices rise.'"
• He said "'Their statements are coming with explicit recognition that this isn’t permanent and that it’s going to be revisited in the near future,” he said of the White House’s communications about tariffs. 'Part of those announcements are explicitly putting off into the future major decisions, so that’s why it feels like there is in corporate America a lot of sitting on the hands. If they’re sitting on their hands, that backs into the wait-and-see posture of the Fed.'"
• The implication is that a decision on rate cuts could be even further into the future - "'If we could get the dust out of the air, it would make sense to think that rates would be going down,' he said. 'But the bar for action has to be high when there’s so much uncertainty.'"

An advisor to the European Commission and the Spanish government discusses EU-U.S. trade talks.- On MNI Policy MainWire now, for more details please contact sales@marketnews.com

• Alongside the broader recovery for the dollar, the risk sentiment surge has allowed the Canadian dollar to relatively outperform in recent weeks. USDCAD is just 1.7% above its lows compared to the 3.7% recovery for the USD index.
• A smooth election process and optimism surrounding the initial discussions between the Trump and Carney administrations will likely be capping the USDCAD topside, helping to keep the bearish trend condition intact the move higher considered corrective for now.
• Moving average studies are in a bear mode position, highlighting a dominant downtrend and potential is seen for a move towards 1.3647, the Sep 19 high and a prior breakout point. Key resistance is seen at 1.4035, the 50-day EMA.
• Bank of America maintain their bearish USDCAD view and forecast path, but do not think conditions are ripe for a bearish volatile breakout like how the pair traded in April. They expect spot price to drift down to 1.35 over the medium-term, which is the average spot level that USDCAD has traded at from 2023 until end of Q3 2024.
• BofA would advocate expressing this moderate bearish view via 1y 1.36-strike put with a 1.30 RKO barrier (initial premium 0.33% USD, spot ref 1.3997, vol ref 5.915). The RKO put structure fades historically low USD/CAD skew and allows BofA to express the medium-term bearish USD spot view with cheapened premium.