Forexlive Americas FX news wrap: Trump and Xi talk, Trump and Elon fight

• Trump says call with Xi 'reached a very positive conclusion'
• Trump says call with Xi went 'very well'
• Xi: China and US agree to start a new round of trade talks
• The Trump-Musk divorce is official
• Elon takes off the gloves: Says Trump is in the Epstein files
• US initial jobless claims 247K vs 235K expected
• US April trade balance -61.6B vs -70.0B expected
• Carney and Trump are holding secret talks, US ambassador says
• ECB cuts key rates by 25 bps in June monetary policy decision, as expected
• ECB's Lagarde: The services sector is slowing
• Lagarde: We are getting towards the end of the easing cycle
• ECB sources: a 'visible majority' in ECB meeting expressed preference for holding in July
• ECB officials expect rate cuts to be paused in July - report
• Fed's Kugler: I continue to support maintaining rate if upside inflation risks remain
• Atlanta Fed GDPNow 3.8% vs 4.6% prior
• Canada April trade balance -7.14 billion vs -1.50 billion expected
• US Q1 unit labor costs revised +6.6% vs +5.7% expected
• US Challenger May layoffs 93.82k vs 105.44k prior

Markets:

• US 10-year yields up 3.4 bps to 4.39%
• WTI crude oil up 52-cents to $63.37
• S&P 500 down 0.5%
• Gold down $19 to $3356
• AUD leads, JPY lags

What a day.

The market moves aren't anything dramatic but the newsflow was memorable. It started with news from Chinese media that Trump and Xi were on a phone call, something that most were expecting to happen on Friday. That boosted sentiment and we anxiously awaited the readouts. When they came there was some disappointment at the lack of real action, but they set up high-level meetings on what could be a path towards a comprehensive deal.

We also continued to hear reports that the US and Canada were in trade talks, something we've been writing about all week. That was confirmed by the US ambassador, though whether there is a deal before the G7 on June 15 is now the question.

The big drama came late in the day as the relationship between Elon Musk and Trump utterly imploded. It started as a fight over deficits but got very ugly, very quickly as Elon said Trump was in the Epstein files and should be impeached. Trump said he was taking away Elon's subsidies and shares of Tesla closed down 14.3%.

The ECB decision was moderately hawkish as officials teed up a pause in July after 8 straight quarter-point cuts. The market is now priced for just 25 bps more in easing in this cycle. The euro initially rose to 1.1494 but couldn't climb above the big figure and later gave back 50 pips. Part of that was USD volatility and some 'sell the fact' on the US-China talks.

All told, the moves were relatively small on most fronts and the biggest mover was the yen, which roundly declined on falling trade tensions. Eyes now though might move to the US budget bill as Elon fights it. Republicans are hoping to pass it by July 4.