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COPENHAGEN (March 28): US Vice President JD Vance's trip to Greenland on Friday comes at a time when President Donald Trump is insisting that Washington should take over the semi-autonomous Danish territory.

Why does Trump want Greenland?

Greenland's strategic location and resources could benefit the US. It lies along the shortest route from Europe to North America, vital for the US ballistic missile warning system.

The US has expressed interest in expanding its existing military presence on the island, including placing radars there to monitor the waters between the island, Iceland and Britain, which are a gateway for Russian navy vessels and nuclear submarines.

On Wednesday, Trump reiterated his desire to take over the island, saying the US would go as far as needed to take it.

The island, whose capital Nuuk is closer to New York than the Danish capital Copenhagen, boasts mineral, oil and natural gas wealth, but development has been slow and the mining sector has seen very limited US investment. Mining companies operating in Greenland are mostly Australian, Canadian or British.

A White House official has said Greenland has ample supply of rare earth minerals that would power the next generation of the US economy.

What is the current US presence?

The US military maintains a permanent presence at the Pituffik air base in Greenland's northwest.

A 1951 agreement between the United States and Denmark gave the US the right to move around freely and construct military bases in Greenland as long as Denmark and Greenland are notified.

Historically, Denmark has accommodated the US because Copenhagen does not have the capability to defend Greenland, and because of US security guarantees to Denmark through Nato, according to Kristian Soeby Kristensen, senior researcher at Copenhagen University's Centre for Military Studies.

What is Greenland's status now?

The island, a former colony of Denmark, became a formal territory of the Nordic kingdom in 1953 and is subject to the Danish constitution.

In 2009, the island was granted broad self-governing autonomy, including the right to declare independence from Denmark through a referendum.

Under the 2009 law, Greenland's parliament, Inatsisartut, can invoke a provision that would have Denmark and Greenland begin negotiations about achieving full independence.

The people of Greenland would need to endorse independence through a referendum, and an independence agreement between Denmark and Greenland would also require consent from the Danish parliament.

Jens-Frederik Nielsen, leader of the pro-business Democrats, which came first in an election on March 11, has said he is seeking a broad coalition government to show unity in the face of the US drive to control the island.

The party favours gradual independence from Denmark.

What does Greenland want?

Relations between Greenland and Denmark have been strained after revelations of historical mistreatment of Greenlanders under colonial rule. However, Trump's interest in making the island part of the US has prompted Denmark to accelerate work to improve ties with Greenland.

Opinion polls show a majority of Greenland's 57,000 inhabitants support independence, but they are divided over the timing and potential impact on living standards.

Many Greenlanders warn against acting rashly — fearing Greenland could become worse off and expose itself to the US if it too quickly seeks independence from Denmark. Most Greenlanders do not want a new colonial master.

Greenland's economy has been reliant on fishing, which accounts for over 95% of exports, and annual subsidies from Denmark, which cover roughly half of the public budget.

In total, Denmark spends just under US$1 billion each year on Greenland, or US$17,500 for each inhabitant.

Since 2019 Greenlandic politicians have repeatedly said they are interested in strengthening cooperation and trade with the US.

However, outgoing Prime Minister Mute Egede has stressed the island is not for sale and that only its people should decide their future.

What if Greenland becomes independent?

If Greenland became independent, it could choose to become associated with the US without becoming US territory.

The island could form a so-called "free association" with the US that would replace Danish subsidies with US support and protection in return for military rights, a set-up similar to the Marshall Islands, Micronesia and Palau.

According to Ulrik Pram Gad, senior researcher and expert on Greenland, Trump's idea of buying Greenland is based on a misunderstanding of international law and the principle of self-determination, which gives people the right to choose their own political status.

What does Denmark say?

When Trump offered to buy the island during his first presidential term, Danish Prime Minister Mette Frederiksen called it "absurd".

Since Trump expressed renewed interest, Frederiksen has said Denmark wishes to cooperate closely with the US while stressing Greenland should determine its own future.

Frederiksen said on Tuesday the US was putting "unacceptable pressure" on Greenland with this week's visit and that Denmark would resist such pressure.

Source: Theedgemarkets

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China has warned Washington that it will retaliate against the US if the Trump administration presses ahead with new reciprocal tariffs on the country next week, according to a report from state media.

Beijing officials conveyed the message during a video call with US Trade Representative Jamieson Greer earlier this week, according to a post by Yuyuantantian, a Weibo account affiliated with state-run China Central Television.

“If the US is determined to harm China’s interests, China will resolutely retaliate,” the media outlet — which regularly signals Beijing’s thinking about trade — said in the post, without citing where it got the information. The post didn’t mention any details about any possible countermeasures.

China’s Vice Premier He Lifeng had “candid and in-depth exchanges” on key issues in bilateral economic and trade relations with Greer during their video call on Wednesday, Chinese state media said. The US readout on the exchange, however, said that Greer expressed “serious concerns” about China’s trade policies. Greer and He agreed on the importance of maintaining communication going forward.

US President Donald Trump is set to announce a sweeping reciprocal tariff program on April 2 against major trade partners, amid deepening strains between the world’s two largest economies. The president has already imposed a cumulative 20% surtax on goods imported from China.

Chinese President Xi Jinping on Friday called on global business leaders to push back against protectionism, seeking to take advantage of growing backlash against rising US tariffs to promote his country as a reliable partner.

CCTV said that many US companies expressed their desire in the past few days for both governments to create a stable environment for businesses, and that mutual respect is a prerequisite if the US seeks to engage with China in cooperation.

Source: Bloomberg Europe

The withdrawal of a time-tested liquidity backstop offered by the Federal Reserve would represent the greatest risk to the dollar’s status as a reserve currency since the end of World War II, according to Deutsche Bank.

European central banking and supervisory officials have held informal discussions about the possibility that the Trump administration will push the Fed to step back from global funding markets in times of market stress, Reuters reported this week, citing unnamed sources.

There has not been any indication that the Trump administration wants the Fed to scale back the so-called swap lines that the central bank has offered during past crises. But the reported conversations in Europe come as the US is stepping away from its European allies on other fronts. Even without the Fed taking action, any fears about the reliability of the swap lines could be damaging to the dollar, George Saravelos, Deutsche Bank’s head of foreign-exchange research, wrote in a note to clients Thursday.

“Were such concerns to prevail among America’s Western allies, it would likely create the most significant impetus to global de-dollarisation since the creation of the post-World War global financial architecture,” Saravelos wrote.

The swap lines, first launched during the 1960s, allow global institutions to borrow the greenback in exchange for their local currencies, easing demand for the dollar in times of financial stress. Revived in 2007 as the financial crisis heated up, the availability of this Fed support has long been considered an important — if infrequently-tapped — backstop during times of market turmoil.

The European Central Bank, Bank of Japan, Bank of Canada, Bank of England and Swiss National Bank currently have standing swap line arrangements with the Fed. At the height of the market dislocations wrought by the pandemic in early 2020, the lines were also extended to other central banks including the Bank of Korea, the Banco Central de Brasil, and the Banco de Mexico.

Saravelos noted that the Fed has sole responsibility for its programs. But, he said, the Trump administration can have an indirect influence on the central bank — either via “moral suasion” or through the figures appointed by Trump to its governing board.

Source: Yahoo Finance

GBPUSD technicals

The GBPUSD has been in a steady uptrend since bottoming at 1.20987 on January 13, a low that aligned closely with support levels from September and October 2024 (see red circle on the daily chart). Since then, the pair has continued to step higher, carving out a series of higher lows and higher highs.

In February, price action found support at a swing area between 1.22986 and 1.2335, reinforcing bullish intent. That momentum carried into March, with the pair moving back above the 200-day moving average, currently at 1.28028, and into a key swing zone that extends up to 1.28612. Notably, dips over the past two days have stalled just ahead of that upper swing area, signaling strong underlying support.

The pair is now trading at new session highs, reaching 1.2989, just shy of the March high of 1.30139, which also marks the highest level for the year. A break above that level would likely spark further bullish momentum.

Zooming into the hourly chart, early-day price action saw a bounce in GBPUSD following the Trump tariff news, which triggered a wave of buying. The initial move higher tested the 100-hour moving average near 1.2922 (blue line on the chart), where sellers initially leaned in. However, the downside was limited, and once the price broke above the 100-hour MA, bullish momentum carried it through the 200-hour MA as well.

That initial breakout, though, was short-lived, as the price chopped back and forth. The encouraging sign for buyers came when the pullback found support once again at the 100-hour MA, reinforcing its importance. That successful retest gave bulls the green light to resume the move higher, lifting the pair toward the 1.3000 psychological level.

The pair is now trading near key resistance at 1.30139, the high for March and the highest level for the year. A sustained break above that level would strengthen the bullish bias and open the door for further upside.

On the flip side, failure to break above 1.30139 would dent short-term bullish momentum. Still, it would take a drop back below the 200-hour MA at 1.2949 and especially the 100-hour MA at 1.2922 to shift the bias more definitively in favor of sellers.

Source: ForexLive

UK bonds retreated on Thursday, erasing the gains made after Wednesday’s announcement of a smaller-than-expected debt plan. 

Investors quickly shifted their focus to the nation’s precarious fiscal position and the broader risks of rising global borrowing costs.

UK gilts under pressure as rising yields threaten Reeves’ fiscal buffer

Gilts declined across the curve, underperforming their European counterparts and pushing the benchmark 10-year yield up by as much as eight basis points to 4.81%—its highest level since mid-January when a global bond selloff severely impacted Chancellor Rachel Reeves’s fiscal flexibility.

Although Reeves yesterday restored her fiscal buffer to exactly where it was in October, firms including BlackRock Inc., Allspring Global Investments and Fidelity International say the UK bond market remains very much at the mercy of external forces. 

Lauren van Biljon, senior portfolio manager at Allspring Global Investments, noted: “Reeves has very limited headroom, and potential domestic and international shocks are numerous.”

The concern is that rising global bond yields, persistent inflation, and weaker-than-expected growth could trigger another selloff in UK bonds, once again eroding Reeves’ fiscal buffer. 

The Office for Budget Responsibility cautioned that this headroom could vanish entirely if U.S. President Donald Trump imposes 20% tariffs on global trade or if borrowing costs increase by just 0.6%.

UK fiscal woes cast a shadow over gilts ahead of autumn budget

Vikram Aggarwal, fixed-income investment manager at Jupiter Asset Management, said the deterioration in UK public finances can’t be underestimated. He noted that the cheapness of gilts doesn’t make them an attractive buy.

The fragile state of the UK’s finances is heightening expectations that the government may need to raise taxes or implement further spending cuts in October’s Autumn Budget. The Office for Budget Responsibility estimates a 46% chance that Reeves will breach her fiscal rule requiring taxes to cover day-to-day spending.

Shamil Gohil, fixed-income portfolio manager at Fidelity International, said that Gilts will probably remain in no man’s land until the Autumn budget. He added that they will likely see some fiscal slippage and buffer erosion.

UK bonds rally on borrowing plan, but fiscal risks loom large

Market movements have been erratic, with gilts experiencing sharp fluctuations driven by shifting investor sentiment. 

On Wednesday, UK bonds posted one of their strongest performances of the year following the Debt Management Office’s announcement of a smaller-than-expected borrowing plan. Yields on 30-year notes dropped by as much as nine basis points—their biggest decline since early February.

Pooja Kumra, senior UK and European rates strategist at Toronto Dominion Bank, attributed Wednesday’s bond rally primarily to the favourable issuance figures. However, she emphasized that the underlying reality remains unchanged, with the UK still trapped in a difficult fiscal position.

Some funds, including Vanguard, took confidence from the government’s firm re-commitment to its fiscal rules, saying the relative cheapness of gilts outweighed the risks around the UK’s economic trajectory.

Ales Koutny, head of international rates at Vanguard, reinstated his long-dated gilts position against Germany. He noted that Reeves’ firm stance on fiscal rules being non-negotiable has helped ease concerns about shrinking fiscal headroom. He expects UK bonds to realign with U.S. yields in the coming months.

Markets have wavered for months in their approach to UK gilts, shifting between buying for their high yields and selling over fears that the Labour government may struggle to manage the nation’s deficit. 

Vivek Paul, UK chief investment strategist at BlackRock, noted that the country’s borrowing costs remain highly vulnerable to spikes, suggesting gilts could face renewed pressure.

Source: CryptoSlate