[captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org >> the u.s. president backtracks on currency machine playstation claims while talking the dollar down. the greenback plunges. all-time low. trump questions the path ahead for russia-american relations. drama bruises at north korea's nuclear test sites. investors weigh the risks. trade triumph. chinese exports surged the most in two years, while imports also beat estimates. and brexit bites. hsbc says business isn't waiting. some of its biggest clients have already said goodbye to london.

>> it is "bloomberg daybreak" europe. our flagship "morning show" here in london. i am mannus cranny. >> and i am matt miller ahead of this four-day weekend we have coming up here. >> four day weekend. i can actually smell it. it is in the air. there are less and less people this morning. but there is a whiff of fear in the markets. let's have a look. 7767, two things coalescing together. the vehicles up 27%. there is a little bit of unease in the equity mark. no doubt about it what you are seeing is the j.g.b. the yen has behaved classically this week in many dimensions as

the u.s.-russian relations hit an all-time low. north korea getting ready for something big. could that be another nuclear test? nd the pan risk is rising. the japanese government bond is back in positive territory. matt, we are back. we are careering back towards zero percent, a level we aren't seen since november of last year there. is a lot of manifestation in the risk radar, doesn't there? >> yes. let me start with the dollar because of trumps comments in the wall street that a stronger dollar is a problem. a weaker dollar would be more acceptable, and lower rates beaubois better. you can see the dollar index is dropping a little built. and the yen is strengthening. obviously that is a dollar story, but i think it is interesting to see it going this low. so below 109 yen. continues to get stronger and i

don't thinker. that is a problem for japanese manufactures, especially for the car makers and must be a welcome delight to mark fields and mary barra. let's take a look at zpwold and oil. you would have expected to see a little more gold strength as donald trump makes clear that pretty much everybody in the world now wants a weaker currency. but you see gold coming down just a little bit. 5 cents a troy ounce to 12 86.33. that is hovering highest levels we have seen since last ackley. nymex crude, turning around. we saw brent and nymex both gaining. now w.t.ism is down two cents a barrel. let's get to bloomberg first word news. we go to hong-chin con and debra. >> thanks, matt. well, u.s. secretary of state recollection chiller son and his russian counterpart have vented their disagreements after hours of talks in moscow. they did, however, signal that

neither side is giving up on relations soured by russian hacking and deepening differences over syria. it will be unclear whether vladimir putin would snub hiller son, although in end he joined their meeting for more than two hours. >> i expected the view that the current state of relations is at a low point. there is a low level of trust between our two countries. the world's two foremost nuclear powers cannot have this kind of relationship. >> the bank of korea's has held its key interest rate low at e record low of 1.25% saying commim growth continued to recover. singapore's central bank kept monetary policy unchanged after the common contracted in the first quarter, saying the neutral stance is appropriate for an extended period of time. north korea's nuclear test site appears primed and ready to conduct a trial. that is according to a u.s. research institute that

monitors the country. analysts from the 38 north website said commercial satellite imagery shows activity at the test site. foreign journalists visiting north korea have been told to prepare for a big and important event today. global news 24 hours a day, owered by more than 2, 600 journalists and analysts. find it at top go. >> debra, thanks very much. check in on what that weakening dollar is doing to asian markets. for that we cross over to juliet. >> well, matt, it is sending the sellers in today. you have seen a stronger yen. the japanese index is off by one percent. at nikkei is tracking november lows. it is office .9%. that is due to the big fall in

the iron other prices. india is would wo to watch. it is going to boost its pay-outs to shareholders. returning $2 billion to shareholders, as sales miss by about 2%. taiwan semi-conductor, coming through with earnings at the bottom of the hour. it is up by a third of one percent, but a lot of analysts saying the strong taiwan dollar could play into earnings there. the big fall we saw in iron hour, down 8%. the world's fourth largest iron other player down. it has lower shipments and higher costs. briefly, let's have a look at that china trade picture. 7494 shows you the relationship between china and the u.s. trade outlook. we have seen exports dissipate a little bit in terms of china's imports to the u.s. about, but we did see china's

exports jump in march more than two years, up 16.4%. customs saying this is the full picture for 2017. trade is steady at the moment but it could start to dissipate in the latter part of the year. >> thank you very much. that is a cracking chart you have there. we will see you later on for this thursday round-up. big news from china as juliette was alluding to. it was a big beat across the board. exports surging the most in two years. we also have president trump backing down from claims that china has been manipulating the currency. for more on these stories let's get to robin in hong kong. great to see you this morning. what is trump's apparent i suppose about face, u-turn, 180. what does it mean for the yuan? >> this is really interesting. significantly, it comes after china had a chat with trump on

north korea. what it effectively does, it gives a lot of breathing space for chinese policy makers. it allows them to go back to a preseason tried and tested strategy of allowing limited strength against the dollar but weakness against trade weighted partners. if you look at what has happened so far this year, the yuan has strengthened about 0.8% against the dollar, but it has weakened about 1.7% against an index of 34 exchange rates that the pboc follows. this will help chinese exports while at the same time staving off probably criticism that it is misaligning or manipulating its currency. >> does it hurt at all -- do trumps comments hurt at all the possibility that we get two rate hikes still this year? that view from the dots

function on the bloomberg doesn't seem to have fundamentally changed. >> no, it doesn't. that is hardly affected. from china's point of view, earlier this year we saw -- last year offense the yuan dropped about 6.5% against the dollar. this year it had a very, very strong first quarter. i mean the entire thing -- you have seen the export figures today surging the most in a couple of years. the whole currency policy, allowing weakness against trading partners is kind of playing into the strategy. trump's comments with a bit of north korea tensions thrown in to ind of allowing the pboc weaken the currency more against the index. >> when you put the role call of risks like that, it is almost like a shakespearean round-up of macbeth.

let's bring in our guest host for next hour. derek is head of the global markets research at his company. that role call that robin rounded us for us there, it is a calderonner on of risk. let's deal with china. hey are not a currency manipulator. you have been doing everything in your power to keep the yuan under wraps zfment this put more pressure on them to keep the yuan as it were at these kind of levels? >> well, i am not sure the specific announcement changes things. for domestic reasons they have been trying to stem the weakness of its currency. i think perhaps the more interesting dynamic in terms of what they are trying to do is the trump comments in regards to the u.s. dollar and the potential that yellen could get another term in the fed. that is hugely important for the dollar.

in that sense it makes the job for china that bit easier. clearly what they are trying to do is keep the dollar roughly stable at around 690 and developments from overnight certainly helps that. in terms of the currency story, don't think it changes much. >> let me put the same question to you that i put to robin. see dollar weakness because traders are less concerned about rising rates. the president of the united states says he likes a low rate environment. but does his opinion on the rate environment really change how the fed operates? >> no, i don't think so. i think if you take the fed's dot profile, i think it is ultra cautious. in that sense i would argue that trump and his comments, and the behavior of the federal

reserve, they are basically on the same page, and i think that is why the markets have interpreted this as potentially trump considering offering yellen another term at the fed. so i think it is all pretty consistent with essentially what is priced in the marks toe moment. the market is prilingsed to some degree where the dots are, certainly for this year, and there is no reason to believe that even with better data, that the fed would up the ante and try to speed up the pace of rate hawkeyes. >> you mentioned yellen there. i was amazed that he mentioned himself that he may indeed consider yellen for another term. how important is that? >> well, i think it is hugely important. certainly the run-up to the elections last year, there was an awful lot about how dramatic the fed and the board of governors was going to change. of course there are still going

to be a lot of changes in terms of new personnel. but ultimately as we all know, it is the chair that really holds the power. especially, after all of what was expect the in regards of what trump would do, if then turns around and offers her another term and she accepts, it really cements her power, and that to me is an indication that we get this continued ultra cautious move toward the neutral level of fed funds. >> we are showing derek a fascinating chart yesterday showing the break-evens rolling over a little built. inflation expectations getting a little bit softer in the u.s. is it possible that the fed does get a little bit more dovish than the stance that we expect from them this year? >> it's possible. you know, i certainly think given what has happened over the last couple of weeks and definitely this intensification

of geopolitical risk and increased risk aversion, it does raise the prospect. i think also the dollar has been underperforming. this isn't getting much attention in terms of the depow political situation, but the data is somewhat more mickled han it was certainly -- more mixed than it was certainly in the run-in to last year. the g.d.p. index has dropped to a new low of 0.6%. the q-1 data, there is reason to be a little skeptical. but beyond that, some of the sentiment indicators look like they are about to start turning. the hard data is more mixed than it was. it is a good question, but the fed are being ultra cautious, so i still think there is scope for two modest rate sbks through the remainder of this year. >> i want to close out with currency manipulator. we know what that is. they have a bilateral surplus,

a current surplus of 3%. who has been naughty? who is on the naughty step in this is what we are looking at here. taiwan. who is potentially going to be on this list? taiwan, japan and vietnam. it, i am art saying not that bathered about the vietnamese. it is too small. what are the risks to other markets if you get branded up as a manipulator? >> for these countries, and switzerland is another one. >> they do like a bit of it don't they? >> they meet two of the three criteria. the only one they don't meet is the 20 million delaet trade surface. >> why is nobody talking about the swiss? >> they have done a good job of trying to dress this up as a monetary melo type action. if you look at the currency,

they haven't been driving it weaker. they had a floor in place, and they dropped the floor. now it is pretty much stable at current levels. obviously the key for the markets was china. of course in that same test, they went from meeting two of the criteria, to one. so based on purely the test said by the obama administration and the legislation under the treasury report, china was moving away. if one of the other other countries decided it is less important, and i don't think it is going to be that significant for the broader markets. >> we can't call every country that manipulates its own currency a currency manipulator, otherwise there wouldn't be any left. derrick, head of global market research will stay with us. coming up. rebuilding relations after election hacking and syrian tensions. is there hope yet for harmony between the u.s. and russia?

we get the word from moscow next. this is bloomberg.

it has just gone 20 past one in the afternoon in hong kong. take a look. still seems to be a slight cover of smog over the island city/state there. it is 6:20 in london, 7:20 here in berlin. let's get to russia though. u.s. it was rex tillerson and the russian count part say they won't give up on ties soured by differences over syria. they met alongside vladimir putin in moscow yesterday before telling reporters that efforts must be made to mend the ailing relationship. >> i expressed the view that the current state of

u.s./russia relations is at a low point. there is a low level of trust. the world he is two foremost nuclear powers cannot have this kind of relationship. >> joining us now on phone from tony hal loomberg's pin. how close did they get to patching up the relationship? even if they have differences now, did they seem like they all wanted to come back together? >> good morning. i think despite all the prematch hype, there were expectations for meeting and the two sides met them. the fact of the meeting turned out to be more important than what they agreed on. there was some doubt even to last moment that president putin would meet with tillerson. they met for two hours. it was clear there were very eep disagreements over syria

and others. they disputed whether russia interfered in the u.s. presidential elections. essentially there was very little about which they agreed apart from the basic issue that north korea should be de-neutralized and syria should remain a unified state. how they get to those objectives they did not say. >> what is the way forward? the gulf between the two seems quite insurmountable at the moment. was there any hint of progress on syria? they have reopened the communication light in regards to flight paths for aircraft. is that a progressive step? >> yes. i think that was the one olive branch that came out of the meeting, that putin agreed to with draw the agreement that attempted to prevent hostile acts between the two countries.

but beyond that, they couldn't really find any common ground. whether n't agree on that remained. they didn't feel there was no future for saad in syria. was an n said there investigation of the chemical attack that was supposed to be carried out. the russian ambassador vetoed a call for an international investigation by the u.n. into that event. so there was clearly nothing they could agree on that would allow them to move forward on syria at all. >> i suppose the conversation we had yesterday from a variety of people were that the russians would probably double down. tone hal pin with us. derrick, when you listen to let

rick from hiller son and other things, a number of things come to mind. j.g.b.'s going back to zero%, and volatility is rising. when you look at these nuances of depow politic, is it yen you are drawn to? is it yen that is the haven that has perform sod classically this week that absolutely trump everything else? >> yes. i think right now in current conditions the yen looks the most attractive for a number of reasons. firstly, going into the beginning of this month, the yen was the worst performing g-10 currency since trump's election victory. so in terms of potential for scope to strengthen, it was there. then it has its traditional very large surface. but important also, the japanese authorities are nowhere close to levels where they could potentially start to intervene. and the swiss franc we know

that they are very active, in particular during periods of geopolitical risk events. and then the dollar i say in current conditions, the yen is the favored one, but i think if went into an extreme risk event, then dollar liquidity potentially becomes an issue, and that could personaling a better prfmenter in an extreme risk-off vanilla. but we are not in an extreme risk will have off vinny, and in that situation, the yen looks to be the currency of choice. >> what about a risk-on event? i am looking at the ruble here. it is strengthening today, and over five years you can see that the incredible amount of weakness that came during ukraine, crime ya and sanctions has really eased a little bit there, and now we are starting to see a trend in ruble

strength there. what do you think about the currency? >> i think there is some external factors. obviously oil is most obvious. but i think domestically as well, they are really get to grips with inflation, which is dropping much, much more dramatically than what the markets had envisioned even a couple of months ago. i think from a real yield perspective if you like, the ruble does look attractive. and with inflation well under control and falling further there, are better prospects in terms of the macroeconomic conditions. and obviously the trump comments in terms of the dollar, if that is going to kind of change the risk-reward in terms of the direction of the dollar going forward, that is another supportive factor for crude oil at this point. >> derrick, we have a little more to get to. he stays with the daybreak team. up next, london is turning. the british capital market sees

its biggest slump since the financial crisis. we ask is brexit really beginning to bite where it counts in the u.k.? that is bloomberg. ♪ matt: it is 2:30 p.m. in the

afternoon in tokyo. .et's take a look at the palace absolutely gorgeous once again in tokyo. 6:30 a.m. in london, 7:30 a.m. in berlin. let's get a check on the market right now. for that we go to nejra: stocks aren japanese shares down forflat. a third day. the yen and a five-month high

moving average. all about that risk aversion in north korea, tensions playing out. a lot of the asian currencies strengthen inning the dollar. the aussie dollar the most in a month. on china's gaining solid export data. i wanted to show you the dollar. the dollar in sex -- index extending a decline after donald trump's comments on the dollar being too strong. dollar index is lower. also hitting its lowest level since november 17. this after trump saying he likes low interest rate policy. we are at 2.23%. it has dropped by 2.3% key

levels but also dropped below that range that it has been in since the end of november. we are talking about geopolitical tension. japan's 10 year yield down to basis points and that yield heading toward zero for the first time since it came back into positive territory in november. this as the vix is climbing. manus: a little bit of breaking news. this is one of the huge retailers in france. they have a number of businesses on an international level as well. first-quarter sales 21.3 billion euros, bang in line with what the market was looking for. in france there is slippage. the market had penciled in one point nine 7 billion. french markets are the difficult part for this business. wasor two of the outlets

seeing there is not going to be any good news but the sale numbers come in line. first-quarter sales, for 1.3. that is as the market expected. they will see a sales growth of 3% to 5% this year. and sales matched of the estimates. you have gains in brazil, outweighing china. sales rose by 5.6%. in china the sales dropped by 5.5%. the personification of improvement is here in these numbers. france rose to half a percent. spain growth of 3% and italy of 1.6%. that is the personification of the european recovery story. by moore at carrefour. it is on your bloomberg.

strong and theoo design to good, paraphrasing what donald trump had to say. the u.s. president said the dollar is too strong, he told the wall street journal it would be preferable if the fed kept rates low. the greenback and treasury yields much lower. matt: the second story is about u.s.-russia relations. both concluded they are at a and needed low level to be amended. the kremlin said it is willing to resume communications to prevent conflicts about airspace. you know it they say about rock-bottom. they can only get better. dollar strength, it

is my fault. people have confidence in me. the united states president, not me. jpmorgan, citigroup, wells fargo, they'll report today. analysts will keep a close eye on net interest margins. and the credit trends in trading. we will be spoke as speaking to the wells fargo ceo. matt: we spoke with the imf director christine lagarde. trade isined why open important for policymakers looking to stimulate growth. >> protectionism is clearly a threat and one that if it was to be realized would really be a

break on growth, would be a break on productivity, would be a break on investment. innovationsg both and trade are conducive to productivity, productivity is the engine for growth and utter allocation of resources. as part of the risks that we see, clearly, protectionism is one. the political uncertainty that we see around the world, particularly in the european region is also high on our agenda of risk. the potential for capital flows moving from emerging markets economies to advanced economies as a result of the reinforcement of the dollar and the rise of interest rates is a third one. those are the three risks that apply to a situation which is quite positive at the moment.

>> to you believe the trump administration could be less protectionist that we feared in the beginning of january? >> as always, i do not think would actuallyy ,rescribe limited growth limited productivity, limited investment, limited innovation. if policymakers including the u.s. policymakers want better growth, more investment, more innovation and productivity, trade is part of the solution. then you go into the question of what kind of trade? is it trade with restrictions, is it trade with assorted measures and i hope everyone would agree that we do not want distortion, we do not want restriction, we want a trade that is open, that is fair and

inclusive to facilitate opportunities. trade fair and inclusive for everybody. is housing market is facing the best slump since the financial crisis. the price balance fell last month to the lowest level since february 2009. the receivers of commerce has warned the u.k. government not to let exit divert attention away from the structural challenges facing business. let's try and make sense of some of these stories. it, house prices in the capital have succumbed to sentiment and concerns about brexit. article 50, asgh you look at the nuances of language coming from europe, do your fear levels rise, how do

you look at sterling at the moment, how do you look at the u.k.? >> i look at us a little more optimistically that i think the markets are looking at them. we have one of the most bullish planned forecast. we could end over 130. in terms of the house price situation, i agree, there is a brexit issue there of course. tax changes are playing a role. on prices which is a large portion of the market. filterings are through and there are the changes as well and all of those s is having a bigger impact on london. in terms of exit, recent developments should be indicating some increased confidence in terms of how the negotiations could go.

the principles of negotiations have been set by both sides. and certainly what jumps out in one crucial area is the whole transitional phase. the dealtime between being done and the final brexit taking place. i think theresa may's comments in the middle east in regard to accepting continued interference tells me there is a good chance that we could be in a transition time where not a lot changes. plus fory is a big reducing potential risk of disruption to the macro economy. hsbc said some of its largest clients have asked for their business to be routed mainland european offices so paris was the example they gave. i suppose anyone could have seen this coming, no business wants to be stuck even if there is a

low chance that the u.k. does past and i do not think anyone sees it as that low. why would the pound retained strength if london loses its weight as a financial capital of europe? guest: there's going to be lots of developments as we move forward. i do not for a moment think there are not going to be changes. i am sure the end result is going to be the city and financial services as a percentage of total gdp is going to become smaller. the idea that london is going to lose its dominance in europe, i am very skeptical of that. has anot forget europe window in euro nonperforming loan problem. it has a much more vulnerable banking sector than the u.k. does. the do not forget that in immediate aftermath of brexit, the first three to four weeks,

european banking stocks underperform u.k. banking stocks area there is a very good strong incentive on both sides for a favorable financial services deal to be reached in the end. i can see a career for you forging forward and terms of talking a good brexit. by the end of the year. coming up on daybreak. million in races $9 its first dollar denominated islamic on sale as it tries to fuel the deficit. we will bring you the details. this is bloomberg. ♪

in newt is 1:45 a.m.

york city. let's take our traditional look at the empire state building. it is being laid up in certain colors to honor the stanley cup or to commemorate the stanley cup layoffs. those colors continue to shift and i am not exactly sure who is in the playoffs because it is hockey. let's get to the bloomberg business flash. debra: thank you. hsbc has said some of its largest clients have asked for the business to be routed through the offices in mainland europe. clients are not waiting to see what kind of exit deal the u.k. strikes with the eu and added executives at multinational companies are insuring they can continue trading whatever the outcome of negotiations because they cannot afford to wait two years. toshiba's plan to sell its memory chip business to raise money have hit a snag. western digital said the sale

may violate the company's contracts. western digital's ceo had written a letter to toshiba's board the devising them they should negotiate with his company before any sales. executive told lumber the company disagrees with the assertion. angry united airlines customers can now event there. at a gc target. the chief executive's paycheck. the man handling of a doctor dragged off and overbooked ceost in chicago and the response is unlikely to help his cause. meanwhile the airline has said it will compensate passengers on that flight to cover the cost of their fares. that is your bloomberg business flash. mac and manus. manus: thank you very much. major stories in the middle east.

saudi arabia has raised money and the islamic bond sale, $1 million more the than what the government was running to issue. turkey is for. for a referendum on sunday. that could grant sweeping new powers to president erdogan. let's get to a bead -- abu dhabi. a lot of waiting and pricing but society is coming with their issues. >> pretty amazing capital markets deal in the region. we saw saudi arabia raising $9 billion in its first ever denominated sale. at $33 billion. a monster order for the debt issue. it suggests there are still plenty of appetites in the bond market even after we have had record sales of issuance. we had $72 billion worth in the

first quarter of this year alone. we had $24 billion and you add in that $9 billion, we are at the start of the second quarter of the year and we are up to about $33 billion in total. pretty amazing numbers here. bond i feel like the gulf issuance room began after you move there. i'm not sure if those two events are related. do you expect this to continue, is this a trend that is sloping upwards? >> yeah. the order books suggest saudi arabia can get more done. if you look at the economics of the kingdom, they are trying to cap foreign capital, foreign investors to plug their budget deficits but there is a under the radar issue at play. the big liars of domestic gulf funds used to be the local banks. we had a liquidity squeeze over the past year which means that

banks cannot really do that anymore. saudi arabia and other gulf countries are, they have extra incentives to go out to the foreign capital markets and this marks a bit of a glasnost, opening up of the gulf markets to foreign investors for the significantly. something to watch. at this point it is almost a certainty that more that issuance is on the way. it is a question of whether it is europe on's or dollar bonds. glasnost in riyadh. to have aing hard-working weekend. they're going to the polls and there is a referendum on sunday. it could give erdogan the power that he desperately wants. how busy are you going to be and what is this referendum really about? >> as you said it will be a very busy weekend. eligible tourks are

vote and they will decide whether they are going to say yes and give executive power to the office of president erdogan and eliminating the role of the prime minister. the president said it is important to change the constitution from a parliamentary system to a presidential one because it will help decision-making become much more efficient rather than the two headed government we have now. his critics are arguing that its is a power grab and lacks the necessary checks and balances leading to authoritarian rule. matt: i have been conducting a very informal poll of dual citizens in berlin, there are a lot of turkish-german dual citizens. they seem to be overwhelmingly on the aside. what results are pollsters in istanbul forecasting? >> right now the race is too

close to call. the polls are in a connect. turkey is a deeply divided nation. 60% of the country loves the president while the others say that he is becoming increasingly authoritarian. -- thereth noting that was a failed coup in turkey trying to overthrow the president. at the time he called it a gift from god and use it as a reason over 100,000 civil servants saying that they were laying -- linked to the movement that he says was behind the failed coup. there is a state of emergency which has been in place since the failed coup in july. let's see what sunday brings. what will the results be and what will the impact be on the

currency markets? listening to tracy and -- the , the lira is eight -- up at 18%. do you buy the view that if erdogan gets a yes giving him this executive power that it would be a confirmation of a state of played it already exists and it could embolden them? >> i do to a degree. since this became an issue in october of last year when there was a realization that there was going to be support in parliament for having this referendum, the dollar turkey is up 22% to today's levels. it involves of issues. a lot of that is in relation to this. i think there has been a huge overhang of uncertainty with very little else going on apart

from the bill that to this referendum on sunday. the longer-term implications of this centralization of power could certainly have negative indications going forward over the longer-term. i think as we both know in terms of foreign exchange and focused on the short term we are, the removal of that uncertainty could very well in circumstances of a yes vote result in a recovery of the lira. our dollar lira forecast at the end of the year is 340. we are expecting the removal of tos uncertainty to help strengthen the lira going forward. does it remove any uncertainty for the euro as well? be spillover effect? the main story leading up to this referendum has not been inside turkey for us as much has been in holland and germany where all of these rallies have been held.

and 31 has 3 million refugees that he is holding back as i do not want to say as a favor to merkel but a favor to germany. what do you expect the fallout to be for the euro? guest: from the result there are so many limitations and directions in which we could go in terms of the implications of him becoming more powerful. i am not sure the markets would have enough conviction to influence the spot rate in the aftermath of the referendum. is france that is in full focus from a political risk implication. that to me is going to be more and more the driver of the euro in the short term as we move toward april 23. guest yesterday said you want to buy your euros

between round one and round two of the french election. , let'slear the hurdles say that we end up with the theory which is macron, or do one, giving back the power and trump continues on with these moderate about faces, you could get quite an aggressive relief rally in this market. will you get a real pop if the pen does not win but mellow shun does.echon guest: if you believe the polls, let's assume that macron wins. looking at correlations that might give us a proxy of how or mems areal risk in the euro at the moment, i would say three big figures for the euro dollar. and five for the euro yen.

that is what we might see. europeannk you, the head of global markets research at mufg. this is bloomberg. ♪

matt: the u.s. president backtracks on currency manipulation claims while taking the dollar down. the greenback plunges. at north korea's nuclear test site. investors weigh the risk. trade triumph. chinese exports surged the most in two years while imports also beat estimates. brexit bites. hsbc says business is not waiting. some of its biggest clients have already said auf wiedersehen to london.

good morning and welcome to bloomberg daybreak europe ahead of a four-day weekend for most of the nations in this lot. imf am matt miller in berlin. manus: i am manus in the city of london. it is a short trading week. donald trump sisi dollars strong because of him. risk off in the markets. marketseeing the paris open down sarah.600 percent. dax down by .2 over percent. we see a continuation of this ink off and it is manifest those risk radar numbers that you have got here. volatility is rising in the u.s. dtv during back to

zero. matt: i am looking at the yen. it is a dollars story but the yen is crossing below a number of technical levels now under 109 coming back a little bit but real strength in the yen, real weakness in the dollar as president trump says her strength is due to his performance on his election. he prefers a lower dollar and would prefer lower rate, a lower rate environment so traders are selling the dollar against any number of major currencies. taking a look at the volatility, we have to fix index, the so-called fear gauge, protection against drops area that would be 500 futures. we also have gold, gold falling a little bit, had strengthened 1285.lly but down to 53ex crude turning around at

point 09. the fix index since i brought it up, i will mention the vix index for you. we are looking at a gain of 4.5% of 25077 -- 1577. thes: let's talk about japanese and australian close. i had some breaking news coming in. -- unishop at any clue qlo. at ¥1.4 billion. the estimate was for 38.5 and yen. , the foreign exchange gained. the second quarter net topic -- for 14.7hat was

million. market. your equity you are seeing a little bit of breaking news coming from retailing. let's get to juliette saly with the bloomberg first word news. thank you. u.s. secretary of state rex tillerson and his russian counterpart sergey lavrov has been to these agreements after hours of talks in moscow. the signal neither side is giving up on improving relationships. it has been unclear whether president vladimir putin was to listen. he joined the meeting for more than two hours. >> i expressed the view that the current state of relations is at a low point. there is a low level of trust between our two countries. the world must to foremost nuclear powers should not have

this kind of relationship. juliette: london's housing market is in the worst slumps since the financial crisis eight years ago, heart of a bladder slowdown. the ray lewis tuition of chartered surveyors said it fell to the lowest since ferrari 2009. a greater percentage of agents reported drops. the report showed more respondents the not still expect prices in london to prize -- to rise over the next year. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. thean find more stories on bloomberg at top . and comments about the dollar from president trump weed into trade in the asia pac region. closing down .7 of 1% to the lowest level since november. also seeing some weakness coming through in the asx 200 closing down by .8 of 1%.

also most of that due to the drop that we saw in iron ore. you also had the aussie jobs data coming through which was a little stronger than expected. unemployment at 5.9%. china markets are well supported in late trade and the kospi with its first win in seven sessions. it is earning season. it will boast a pay up to shareholders. it missed with the earnings although it should close higher by a quarter of 1%. the depressed smartphone market weighing on the chipmaker. impact on fortescue in sydney. we also had china trade data coming through and exports were .ncredibly strong up 16.4%

this shows you the china-u.s. trade outlook. experts from china to the u.s. started to fall although they were strong in march. customs coming through saying even though trade is slow and steady they are expecting it to fall off toward the latter part of the year saying that the pace of trade expansion is slowing somewhat. manus and matt. very muchk you indeed. a very cool chart. juliette saly in hong kong. north korea's nuclear test site appears ready to conduct a trial according to u.s. research to that monitors the country. joining us from home can't is david tweed. there is a lot of speculation that north korea is about to do a nuclear test and numerous reasons for that kind of speculation. fill us in. this is a u.s. institute that looks closely at what is going on on the ground looking

at satellite photographs in north korea. we have seen the joint chiefs of staff in south korea and they take pretty good interest in what is going on north of the border. they say it does not look like there is any particular preparations underway. what we do know is we have the 105th birthday of kim l song -- kim il sung coming up. we traditionally get something to mark that. it could the a nuclear test or missile or ballistic test. we will see what happens or what will not happen. manus: we have heard from donald trump that he is creating favor they arechinese, encouraging a conversation. how do you think america is likely to respond given the level of tension that we have at the moment?

david: if there is going to be some sort of nuclear test i think that it would be pretty unlikely at this stage following the conversation that trump had with xi yesterday that the u.s. would take unilateral action. we do not know what china is trying to do behind the scenes with north korea. it could be that china is willing to take much further steps in terms of sanctions and enforcing sanctions or it could event -- it could be that trump wants to sit back and wait and see what results he gets out of the chinese. it would not make sense for the u.s. to take unilateral action after he has got off the phone with president xi and it looks like the chinese want to help us. manus: it could be one of these moments. andi goes the extra mile lays the groundwork for many other facets in that sino-u.s.

relationship. david tweet, our bloomberg news reporter in hong kong and a thank you. let's bring in our guest. head of european rate strategy. he listened to david run through, we're waiting to see whether there a missile test from north korea. we have these rising geopolitical issues. in regards to syria. bondi put it back into the market, i see money going into the yen and on. all the classics. when i translate that into the rve, you said,-cu when you see these moments of flattening, what do you want to do? >> the steepening is a very attractive trade. it pays you you has

for holding the position that will work nicely when the fed qes stop reinvesting in the portfolio. at the last fed meeting they told you that this is what they are considering. rather than being something the thinking was a wishy-washy thing, the question is when do we get that structural steepening? -- asld be as early it early as september. when the markets lose is when ae signal strongly, when strong consensus appears and how and when it will materialize. that could be as early as june. this seems like a asset play to us. question ofis the how gradually they do that balance sheet reduction and also how much power president trump tries to exercise in order to

keep the low rate environment that he apparently wants to see. where those risks like? guest: that is why we have had a significant move to his comments on the dollar and low interest rates. that would imply that he would prefer to see the fed stopping the reinvestment so they can maintain a less hawkish interest rate policy and you would have a weaker dollar then you otherwise would if you have an interest rate path that is going higher and eventually taking real interest rates with it. home, let's come back to back to europe. the risk is real, a four-way real race the next week we get round one. this is the net short positions the frenchich are government bonds. maintain your you

going to see a little bit more swagger in the market. guest: i think so. there has been complacency in the market since there was a big washout in february and ever since then strategists say that this will be fine. now the test of all those views is going to be seen in the market. particularly when we get between the first round and the second round because the pen i expect still there for the second round. we are going to see the parallels between this and brexit and donald trump. we will see that this is a binary outcome, one where there is not so much commitment the non-leing for pen candidate and therefore a high degree of uncertainty. coreyou are investing in a european denominated bond. the tail risk becomes the french

franc and you have the potential for that to be reassessed as to whether that is the right thing to have in your portfolio. that is the question. whether it is still going to materialize. matt: a default in bonds. melenchon see victorino's a runoff between the altar -- ultra-left and ultra-right. how do you see that coming out? >> that is the least market friendly outcome. that is the one that is allowing spreads to widen out in recent sessions. chon'sn shawn -- melen strength continues, that would be the one that ratchets the stress out on french spreads widening them out. you can see from another aspects

of the market, investors are waking up to these risks but still it is far from being fully priced into french government bonds. it is almost an attractive point to be considering to sell the bonds outright rather than looking at spread trades. -- to not worry about the spreads. thank you for joining us. daybreak team, we will have a conversation throughout the day. this were you get -- this is where you get the best of conversations. tonight you have the cfl -- cfo of wells fargo. we have a conversation with paul venables joining us. this is bloomberg. ♪

matt: it has gone 7:19 a.m. in the german capital of berlin. i see the sun over the brandenburg gate. something we have not seen here in a week. , a day glorious day ahead of a four-day weekend for us and for you. why do we get in celebration a quick check on the bond market? manus: hark, i see. will give it to you. let's have a look at the bond markets. u.s. yieldsdropping any further flattening in yield curves is an opportunity to reapproach the market once the geopolitical situation in his assessment tempers a little bit. you would reapproach the market and reassert yourself with bench government bonds,

brave. if you have a le pen or melencho into the second round you will see a collapse in risk and a drop in the price of yields. german government bond yields moving at .19%. let's get to juliette saly juliette:. thank you. first-quarter revenue growth that matched analyst estimates. the largest retailer said sales rose 6.2% after 21.3 billion euros led by a business that it plans to float. the company has been the biggest father this year. over concern of a profitability -- possibility of a [inaudible] united airlines customers can prevent their fury at the ceos paycheck.

the manhandling of a doctor dragged off and overbooked flight and the response widely used as below par is unlikely to help his cause. the airline has said it will compensate passengers to cover the cost of their airfares. hsbc has said some of its largest clients have asked to be routed through offices in mainland europe. the head of global commercial banking said clients are not exit deal see what the u.k. strikes with the eu. he added executives at multinational companies are ensuring they continue trading whatever the outcome of negotiations and cannot afford to waste two years. that is your bloomberg business flash. matt and manus. manus: thank you. have a great easter. leading global recruitment has released their update reporting an all-time record in quarterly

net fee performance. we have the finance director what -- paul venables. strength coming from, what is pushing the numbers up? paul: most improved market is europe across the whole of europe. our -- 50% of our group and we were 18% in the quarter including germany where we are a dominant player in the marketplace at 23%. the common nation of improved economic backdrop, we have put a lot of investment into that market. a pickup ineeing i.t. and engineering which bodes well for the broader economy over the next year. do you expect brexit to help your business, moving people around and between the u.k. and europe? guest: you will be around the

edges. 98% of what we do is people taking jobs in that country. it might be one or 2%. issuethe bigger exit -- here. as you know that is quite a bit better than the previous quarter. the positive part of it outside the u.k., we have seen no real weaknesses in the global markets at the moment. the -- at the break you are seeing this phenomenal ramp-up in business but you are not seeing commensurate changes in wages. take me through that. guest: we were discussing australia as a boom and bust economy. unemployment is the highest in 13 years. guest: you have high unemployment and retail is still fairly slow growth, we are up 16%. by far the largest recruiter in australia. the common theme that we have

discussed and we are still seeing, most companies, their margins are not improving and what they are doing is being careful on cost. there are individual ways. ,ighly talented individuals protecting them is still there. if you get a promotion you get a good pay rise. what you are not seeing is across the board rises in wages. we have had this discussion over the years, it is a most a common theme across the world. at the moment and most of the markets wherein wage inflation is about 2%. take the u.k., we can have cpi above that. it will go for around 2%. it will not drive wage inflation because most companies are looking to or three years out. they are not seeing improvements in margin, they're looking for growth but it is a competitive market.

correctly,hear you is not just on the company side on the offer, it is the ask. employees, workers are willing to leave a job and go to a new job and they can in this environment. they're not necessarily demanding higher wages? twot: you have got different trends so let me try to explain them. when i joined in a real bull market pre-lehman, 60% of our gross was internal recruitment. it tends to be given by people confident changing jobs. we talked before the difference in technical and professional specialists. .ore than 60% is in contracting you have an interesting dynamic. most companies want [inaudible] and there is a tending to leave to 68 month contracts. they are cautious about

increases that do not go through. especially in the specialist areas. people are staying longer in jobs and they did six or seven years ago. manus: are those trends more manifest in the u.k.? guest: this is global. if you think through, you have the lehman's impact. before, life sciences where we are giving you highly skilled individuals in 12 or 18 month contract in that plays well to companies that want that flexibility. most companies' margins remain under pressure. there's a lot of employment so there is still great security for employees in the professional space but not pent-up demand for wage increases and greater caution about what they are looking for,

they are for career ahead of money. matt: thank you for joining us, paul venables. that is it for daybreak europe. bloomberg markets in european open is next. manus, happy easter.

♪ you are watching bloomberg markets. this is the european open. the first trade of the cash session coming up soon. matt miller is in berlin. changing his tune on china. president trump said beijing is not a currency manipulator but .he greenback is too strong ironic. he is undecided on chair yellen, will she be reappointed? the bank running season begins stateside. jpmorgan, wells