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07.05.2026 11:17 AM
Diplomacy in chaos mode, digital chimera, and Beijing trips. Trader

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However, the triumph of diplomacy lasted only a few hours. By that evening, President Donald Trump posted on his social network a message that completely nullified the State Department's and Pentagon's statements. The president announced that at the request of "Pakistan and other countries," and in connection with some "progress" in talks with Tehran, the implementation of "Project Freedom" would be suspended for an indeterminate short period. At the same time, the naval blockade of Iranian ports remains fully in place.

Never in American history has administrative chaos reached such a scale. On Saturday, the president announced the start of convoying ships; on Tuesday morning, the secretary of defense reported early successes in the operation; at midday, the secretary of state called it the country's main mission; and by that evening, the commander-in-chief had effectively shelved the project with a single social media post. This is not merely a shift in strategy — it is a complete breakdown of a unified decision-making center, where the right hand not only does not know what the left hand is doing but openly contradicts it within hours.

The demonstrative disregard for traditional allies and chaotic maneuvers are doing irreparable damage to trust in the United States. Traditional partners in the liberal democratic camp can no longer take any statements from Washington at face value. Yesterday, allies could attribute failures to tactical errors; today, they face pure, distilled chaos. The Strait of Hormuz remains hostage to this unpredictability: "Project Freedom," which was supposed to save the global economy from fuel starvation, was frozen before it could fully get underway.

When the goal does not justify the means

The chaos in US governance is not simply an accident of circumstance but the predictable result of the lack of a coherent strategy. In operations research, the success of any undertaking rests on two pillars:

  • setting an achievable goal
  • choosing the optimal path to reach it

If the goal is utopian, there are no paths to it in principle. If the goal is sound but the strategy is wrong, the result remains unattainable. In today's Washington, we are seeing the worst-case scenario. Impulsive decisions are made under the influence of momentary emotions, with no regard for consequences. Today's decisions are diametrically opposed to yesterday's, and tomorrow's will be "perpendicular" to today's. This closed loop of unpredictability paralyzes executive levels of government, which cannot adapt to the commander-in-chief's constantly shifting vectors.

While Washington debates the suspension of "Project Freedom," Iranian diplomacy is showing enviable consistency and dynamism. Foreign Minister Abbas Araghchi — who has just finished consultations with Vladimir Putin in St. Petersburg — immediately flew to Beijing. This Russia-to-China route looks like a deliberately built line for creating a unified front amid American uncertainty. Tehran is actively seeking agency through support from key partners, while the American administration continues to spend resources on impulsive maneuvers in the Persian Gulf. The emerging Moscow–Tehran–Beijing axis is becoming the external factor that will set terms, while the US spins in a circle of its own unpredictable decisions.

A billion for a ballroom

Next week, the 47th president of the United States plans an official visit to China — assuming, of course, the trip is not canceled at the last minute as it was in April. It is critically important for Donald Trump to appear before Xi Jinping as a triumphant figure:

  • the victor of the Iran campaign
  • the liberator of the Strait of Hormuz
  • the peacemaker who solved Tehran's nuclear problem

But reality is far from that image. The president's record in the East looks more like a collection of unresolved crises than a list of achievements. While US foreign policy stalls, Trump demonstrates absolute control inside the Republican Party. The Indiana primaries were telling: six months ago, seven local Republican senators dared to refuse the president's demand to redraw districts in the party's favor. Trump answered symmetrically, backing loyal MAGA movement candidates against the "rebels." As a result, five of the seven incumbents lost their seats to Trump-aligned challengers and are exiting politics. The ordinary Republican voter today is a supporter of MAGA ideology.

The Republican Party has, in effect, become a one-man party. Feeling that boundless loyalty, Republicans in Congress are preparing a gift for the president. In the course of the budget reconciliation process, the administration plans to allocate $1 billion to build a new "ballroom" at the White House. Using budget reconciliation would allow the measure to pass by a simple majority, bypassing Democratic objections in the Senate. At a time when the country faces an energy crisis and uncertainty in the Middle East, allocating such a sum for White House interiors reads like a demonstration of Trump's absolute confidence in his infallibility and in his legislators' support.

Deficit despite a collapse in demand

April 2026 was a black month for the global energy market. According to S&P Global Energy, global crude inventories fell by 200 million barrels (or a record 6.6 million barrels per day). The uniqueness of the situation is that this happened amid an unprecedented drop in global demand of 5 million bpd. Normally, a decline in demand leads to inventories swelling, but the war in Iran created a "perfect storm": the loss of supply more than offset even this massive collapse in consumption. Since the start of the conflict, the market has lost about 1 billion barrels in total. Although world inventories are estimated at roughly 4 billion barrels, Goldman Sachs and S&P warn that the figure is misleading.

Most of that oil is "technological" — required to maintain pipeline pressure and refinery operations. There is virtually no operational reserve left. "These are colossal numbers, outside the normal range. The inevitable hour of reckoning on the market is near," says Jim Burkhard of S&P Global. The situation is particularly worrying for refined products. Global stocks of gasoline, diesel and jet fuel now amount to only about 45 days' supply. In the US, where one in every 11 barrels consumed globally is burned by motorists, gasoline stocks could fall to a critically low one-week level by late August.

How soon can the Strait of Hormuz be reopened? Analysis of recent events suggests the Trump administration has likely exhausted the potential of direct military force. The lack of a clear response to the Iranian attack on the UAE port indicates the Pentagon has accepted the limited effectiveness of mass bombardment. Washington's strategy has transformed into a move toward a long-term blockade. Instead of new strikes, the US is betting on economic strangulation. The peak of large-scale escalation has passed, but uncertainty remains, allowing the US to apply long-term pressure on Tehran even at the cost of depleting its own reserves. "The hour of reckoning" will come in a few weeks when the physical oil shortage in Asia and Africa can no longer be ignored — and American drivers may face $4.50–$5.00 per gallon at the height of the holiday season.


7 May

7 May, 04:30 / Australia / Trade balance (Mar) / prev.: 2.258 bn / actual: 5.686 bn / forecast: 4.250 bn / AUD/USD – down

Australia's trade surplus in February widened to AUD 5.69 billion, exceeding expectations and hitting the highest level since July last year. The expansion of the surplus was supported by a 4.9% rise in exports, chiefly shipments of meat and other agricultural products. At the same time, imports fell 3.2% to a seven-month low amid weakening domestic demand and geopolitical tensions. The March report is expected to show a reduction in the surplus. If the forecast is realized, it would weigh on the Australian dollar.


7 May, 09:00 / Germany / Industrial orders (Mar m/m) / prev.: -11.1% / actual: 0.9% / forecast: 1.0% / EUR/USD – up

German industrial orders rebounded 0.9% in February after a deep decline the month before. Positive dynamics were supported by the automobile, textile and metalworking sectors, while aerospace and defense demand fell sharply. The main growth came from foreign markets, especially eurozone countries, while domestic orders declined. A further expansion is forecast for March; confirmation would strengthen the euro.


7 May, 12:00 / Eurozone / Retail sales (Mar) / prev.: 2.1% / actual: 1.7% / forecast: 1.0% / EUR/USD – down

Eurozone retail sales growth slowed to 1.7% y/y in February from January's 2.1%. The current figure remains above the long-term average of about 1.18% but reflects a general cooling in consumption. A marked slowdown in March is expected. Confirmation of the forecast would signal a decline in purchasing power and weigh on the euro.


7 May, 14:30 / US / Job cuts (Challenger) (Apr) / prev.: 48,307 / actual: 60,620 / forecast: 56,000 / USDX – up

US employers announced 60,620 job cuts in March, exceeding February's numbers. The largest shares of cuts were in:

  • technology
  • pharmaceuticals
  • education

About one quarter of the reductions were directly linked to AI adoption. Despite the March spike, total job cuts in Q1 were the lowest since 2022. April's report is forecast to show a decline in announced cuts. If realized, this would support the dollar.


7 May, 15:30 / US / Initial jobless claims (weekly) / prev.: 215k / actual: 189k / forecast: 205k / USDX – down

Initial claims for unemployment benefits for the week ending April 25 fell to 189,000 — a historic low since 1969. Continuing claims also dropped to the lowest level in two years. The data confirmed exceptional labor market resilience despite targeted layoffs at large firms. Next week's report is expected to show a rise in new claims; confirmation of that forecast would weigh on the dollar.


7 May, 18:00 / US / Consumer inflation expectations (Apr) / prev.: 3.0% / actual: 3.4% / forecast: 3.6% / USDX – down

The New York Fed's median one-year inflation expectation rose to 3.4% in March from 3.0%, driven by the Middle East conflict and sharp jumps in consumer expectations for:

  • gasoline
  • food
  • rents

Three-year expectations ticked up slightly, while five-year expectations remained stable. April is forecast to show further acceleration in expectations. If actuals reach the 3.6% forecast, it would indicate mounting price pressure and weaken the dollar.


8 May

8 May, 03:30 / Japan / S&P Global Services PMI (Apr) / prev.: 53.8 / actual: 53.4 / forecast: 51.2 / USD/JPY – up

Japan's services PMI was 53.4 in March, reflecting continued expansion in the sector despite recent years' volatility. The May report is expected to show a slowdown: the index is forecast to fall to 51.2, the lowest in 12 months. Confirmation would signal cooling momentum in services and weigh on the yen.


8 May, 09:00 / Germany / Trade balance (Mar) (surplus) / prev.: EUR20.3bn / actual: EUR19.8bn / forecast: EUR18.9bn / EUR/USD – down

Germany's trade surplus narrowed to EUR19.8bn in February. Exports rose a solid 3.6%, hitting three-year highs driven by shipments to EU countries and the UK, while deliveries to the US and China fell. Imports grew faster than exports. The March report is expected to show a further reduction in the surplus. If the actual comes in at EUR18.9bn, that would indicate weaker net exports and pressure the euro.


8 May, 09:00 / Germany / Industrial production (Mar m/m) / prev.: 0.0% / actual: -0.3% / forecast: 0.5% / EUR/USD – up

German industrial production fell 0.3% in February, with declines in construction, pharmaceuticals and electronics partially offset by the auto sector. Output y/y was flat after January's drop. March is forecast to show a recovery. If the data confirm a 0.5% gain, it would signal an industrial rebound and support the euro.


8 May, 09:00 / United Kingdom / Halifax House Price Index (Apr) / prev.: 1.1% / actual: 1.2% / forecast: 0.8% / GBP/USD – down

The Halifax house price index recorded a 0.8% y/y rise in March, the weakest quarterly reading. The average house price was about GBP299,677, and prices fell month-on-month for the first time in three months. The slowdown reflects geopolitical uncertainty and higher mortgage rates amid elevated inflation. April is forecast to show a steady annual pace; a 0.8% print would indicate a lack of momentum in the housing market and weigh on the pound.


8 May, 15:30 / Canada / Employment change (Apr) / prev.: -108.4k / actual: -1.1k / forecast: 18.0k / USD/CAD – down

Full-time employment in Canada fell by 1.1k in March. Historically (since 1976), the average monthly gain is about 14.49k, with extreme swings during the pandemic. The May report is expected to show a return to positive job growth. Confirmation of the forecast would indicate labour market improvement and support the Canadian dollar.


8 May, 15:30 / US / Nonfarm payrolls (Apr) / prev.: -133k / actual: 178k / forecast: 60k / USDX – down

US payrolls rose 178k in March — the best result since late 2024 — recovering from a February dip caused by healthcare strikes. The main drivers were healthcare and construction, while hiring in the public sector and finance declined. The April report is expected to show slower job creation. Confirmation of the forecast would point to a cooldown in an overheated labour market and weigh on the dollar index.


8 May, 15:30 / US / Average hourly earnings (Apr y/y) / prev.: 3.8% / actual: 3.5% / forecast: 3.8% / USDX – up

Average hourly earnings growth slowed to 3.5% y/y in March — the weakest since spring 2021 and close to the long-run average of 3.15%. The upcoming report is forecast to show wages reaccelerating toward prior levels. If realized, that would add to inflationary risks and support the dollar index.


8 May, 17:00 / US / University of Michigan Consumer Sentiment (May preliminary) / prev.: 53.3 / actual: 49.8 / forecast: 49.5 / USDX – down

Consumer sentiment was finalized at 49.8 in April, a historical low due to the Iran conflict. Consumers are pessimistic about business prospects and personal finances; one-year inflation expectations jumped to 4.7%. May's preliminary reading is expected to remain low. Confirmation would weigh on the dollar index.


9 May

9 May, 06:00 / China / Trade balance (Apr) (surplus) / prev.: $90.98bn / actual: $51.13bn / forecast: $82.4bn / Brent – up, USD/CNY – down

China's trade surplus narrowed to $51.13bn in March — the smallest in 13 months. Exports sharply slowed while imports surged as the country sought resources and semiconductors amid geopolitical uncertainty. April is forecast to show a recovery in the trade balance. Confirmation would signal stabilization of external flows and strengthen the Chinese economy.


Selected upcoming speeches and events:

7 May, 02:50 / Japan / BOJ minutes (28 Apr) / rate 0.75% — USD/JPY

7 May, 10:15 / Eurozone / Speech — ECB Vice-President Luis de Guindos — EUR/USD

7 May, 11:00 / UK / Speech — Deputy Governor for Monetary Policy, Clare Lombardelli — GBP/USD

7 May, 15:00 / Eurozone / Speech — Frank Elderson (ECB Supervisory Board) — EUR/USD

7 May, 15:40 / UK / Speech — Martin Taylor (BoE Financial Policy Committee) — GBP/USD

7 May, 15:40 / Eurozone / Speech — Philip Lane (ECB) — EUR/USD

7 May, 20:00 / Eurozone / Speech — Isabel Schnabel (ECB Executive Board) — EUR/USD

7 May, 21:00 / US / Speech — Neel Kashkari (President, Minneapolis Fed) — USDX

7 May, 21:05 / US / Speech — Beth Hammack (President, Cleveland Fed) — USDX

7 May, 22:30 / US / Speech — John Williams (President, New York Fed) — USDX

8 May, 01:10 / New Zealand / Speech — Anna Brummer (RBNZ Governor) — NZD/USD

8 May, 10:00 / Eurozone / Speech — Christine Lagarde (ECB President) — EUR/USD

8 May, 12:45 / US / Speech — Lisa Cook (Federal Reserve Board) — USDX

8 May, 15:00 / Eurozone / Speech — Piero Cipollone (ECB Executive Board) — EUR/USD

8 May, 15:20 / UK / Speech — Andrew Bailey (BoE Governor) — GBP/USD

8 May, 19:00 / Eurozone / Speech — Isabel Schnabel (ECB) — EUR/USD

8 May, 19:15 / Eurozone / Speech — Joachim Nagel (ECB Governing Council) — EUR/USD

9 May, 02:30 / US / Speech — Michelle Bowman (Federal Reserve Board) — USDX

9 May, 02:30 / US / Speech — Mary Daly (President, SF Fed) — USDX

9 May, 02:30 / US / Speech — Austan Goolsbee (President, Chicago Fed) — USDX

9 May, 02:30 / US / Speech — Christopher Waller (Federal Reserve Board) — USDX

9 May, 14:00 / Eurozone / Speech — Sharon Donnery (ECB Supervisory Board) — EUR/USD

10 May, 12:30 / Eurozone / Speech — Piero Cipollone (ECB) — EUR/USD

Also scheduled are remarks from other senior central bankers. Their comments typically trigger FX volatility, as they can signal future policy intentions.

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Especialista em análise na InstaForex
© 2007-2026
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