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The plot twists of the Morning Bid Europe-Tariff story lose their bite

Wayne Cole gives us a look at what the future holds for European and global markets.

Is it the dog that did not bark? Sherlock Holmes fans would ask this question given the complete lack of reaction from the market to President Donald Trump's threat to double steel and aluminum tariffs up to 50%.

The policy change was announced via tweet late Friday, after the markets had closed. There were some expectations of an impact on the Canadian dollar today, given the size of the steel exports from Canada to the U.S. The loonie has actually strengthened against a generally weaker greenback. European share futures have fallen a little, and Wall St. futures are only marginally lower.

Investors may be assuming that Trump always chickens out, but he is putting off the higher tariffs due to take effect on Wednesday. Last-minute cliffhangers are popular on reality television.

The European Union negotiators were not pleased with the latest plot twist. They threatened retaliation and also let it be known that a court ruling against the tariffs of April 2 gave them additional "leverage".

Beijing is not swayed by Trump's latest attack on China. Beijing has remained firm in its stance. Trump might have to wait a long time if he is waiting for a phone call from China's president Xi Jinping in order to resolve the situation.

Ironic, too, to hear Treasury Secretary Scott Bessent complain that China is holding back vital United States products. After all it was the U.S. who started the trade war in order to rebuff Chinese imports.

Speaking in South Korea, Federal Reserve Governor Christopher Waller said that tariffs posed downside risks for activity and unemployment and upside risks for inflation. He was optimistic, however, about the possibility of "good news", interest rate reductions later this year. This cemented his position as one of the most dovish Fed officials.

Jerome Powell, the Fed chair, will be speaking at an international finance conference on Monday.

Market developments on Monday that may have a significant impact

* UK house prices and European PMIs.

* Fed Chair Powell delivers opening remarks at the Federal Reserve Board International Finance Division's 75th Anniversary Conference. Chicago Fed Goolsbee, and Dallas Fed Logan take part in Q&A.

(source: Reuters)