Canadian Dollar Set to Rally on Fed Easing, Trade Clarity

Shift From Buyer’s Market to Greater Balance

Causal Relationship Between Price Easing and Market Participation

Diverging Perceptions Between Buyers and Sellers

Source: CNBC

Defense Sector Reaction to Proposed Budget Expansion

Political Rationale Behind the Proposal

Market Dynamics Following Policy Signals

Source: CNBC

French President Emmanuel Macron has declared that the United States is "breaking free from international rules" and increasingly turning its back on its allies. His remarks highlight growing European concern over Washington's unpredictable foreign policy.

Speaking to French ambassadors at the Elysee Palace, Macron’s comments come as European leaders work to formulate a response to assertive U.S. actions, including its stance on Venezuela’s leader Nicolas Maduro and Donald Trump’s interest in Greenland.

French President Emmanuel Macron outlines his foreign policy vision during his annual address to ambassadors at the Elysee Palace.

"The U.S. is an established power, but one that is gradually turning away from some of its allies and breaking free from international rules that it was still promoting recently," he stated.

Macron also warned that global cooperation is faltering, creating a more dangerous and divided world. "Multilateral institutions are functioning less and less effectively," he said, adding, "We are living in a world of great powers with a real temptation to divide up the world."

Europe's Push for Tech Sovereignty

In this shifting global landscape, Macron argued that Europe must act decisively to protect its own interests. He specifically called for the "consolidation" of the continent's regulatory power over the technology sector.

The French president stressed the need to safeguard academic independence and advocated for "the possibility of having a controlled information space where opinions can be exchanged completely freely, but where choices are not made by the algorithms of a few."

His comments reinforce Brussels' recent moves to rein in major tech companies through a powerful legal framework. This includes two key pieces of legislation:

• The Digital Markets Act (DMA): A law designed to ensure fair competition in the digital marketplace.

• The Digital Services Act (DSA): A regulation focused on content moderation and holding platforms accountable for illegal content.

These regulations have faced sharp criticism from Washington, which has accused Europe of an attempt to "coerce" American social media companies into censoring viewpoints.

However, Macron remained firm in his support for the new rules. "The DSA and DMA are two regulations that must be defended," he concluded.

France's aerospace industry is sounding the alarm over the growing trend of global supply chains being used as geopolitical weapons. Industry leaders have expressed serious concern that dependencies on critical materials, especially rare earths sourced from China, are creating strategic vulnerabilities.

French President Emmanuel Macron inspects an advanced Safran engine model, highlighting the high stakes for France's aerospace and defense sector.

The Rare Earths Dilemma: A 90% Dependency on China

Olivier Andries, president of the French aerospace association GIFAS and CEO of engine manufacturer Safran, highlighted the sector's precarious position. He noted that 90% of the industry's rare earth needs are supplied by China, a country currently in a tense trade relationship with the United States.

"There is a trend towards the weaponisation of the supply chain, towards using the dependency on critical supplies to create a geopolitical advantage," Andries stated. "That is particularly the case for rare earths which is a very sensitive topic."

While major manufacturers like Airbus and Boeing have largely been insulated from the U.S.-led tariff war due to their deeply integrated global supply chains, anxiety over the availability of specialist minerals persists. These materials are used in small but vital quantities in advanced products like jet engines.

Andries added that the concerns extend beyond the sheer quantity of materials like samarium. He pointed to "intrusive" questions from Chinese authorities regarding the final destination of these resources, a tactic that mirrors the extra-territorial approach sometimes used by the U.S. In his view, this issue is significant enough that it must be addressed at a European level.

Geopolitical Tensions and the Push for European Sovereignty

The supply chain issue is part of a broader call for greater European strategic autonomy. Andries referenced recent remarks by U.S. President Donald Trump about Greenland as an example of why Europe must cultivate its own sovereignty.

"These rather uninhibited messages only increase the growing awareness in Europe that while we are of course partners and allies of the United States, we have to cultivate our own sovereignty and not totally entrust our future to another state," he explained.

The dispute over the Danish territory has alarmed NATO allies, adding to a sense of urgency for Europe to strengthen its own defense capabilities.

Domestic Hurdles and Strained Defense Projects

Adding to the external pressures are domestic challenges. Andries expressed concern over the lack of a French domestic budget for 2026, stating that parliamentarians had "lost direction." This comes as Prime Minister Sebastien Lecornu is making a new attempt to pass the budget. However, Andries confirmed that France's defense spending remains on track for now, driven by increased European military investment in response to U.S. political pressure and the conflict in Ukraine.

Tensions are also evident in multinational defense collaborations. Regarding the Franco-German-Spanish FCAS fighter project, Andries acknowledged a "very strong political will" from French and German leaders to move forward. However, he cautioned, "for things to advance, you also need to have agreements and the manufacturers accepting to work together."

The project has been marked by disputes between Airbus and Dassault Aviation. Dassault has been critical of Germany's decision to purchase U.S.-made F-35 fighter jets while also participating in European defense programs.

To navigate this complex landscape, Andries urged French suppliers to increase investment in the coming years. This would prepare them to capitalize on rising European defense spending and contribute to the next generation of commercial airliners.

President Donald Trump’s proposal for a $1.5 trillion defense budget has captured investor attention, but a closer look at Washington's fiscal and political landscape suggests the figure is almost certainly out of reach.

Breaking Down the Numbers

For fiscal year 2025, the U.S. defense budget includes $832 billion in discretionary funding, supplemented by $150 billion in previously legislated mandatory funding that will be spent over time.

Even reaching a more modest $1 trillion budget for fiscal 2026—a figure previously floated by the White House—would be a heavy lift. That level of spending would likely require a second reconciliation bill, as standard appropriations are only expected to increase slightly.

Pushing the defense budget all the way to $1.5 trillion would demand an additional $670 billion in mandatory funding through reconciliation. Tobin Marcus, an analyst at Wolfe Research, described this outcome as "extraordinarily unlikely" in a recent report, stating, "So there's no way we'll literally hit that $1.5T number."

The Reconciliation Challenge

While the headline number seems improbable, Marcus notes it may be possible for Congress to use the reconciliation process to push defense funding closer to the $1 trillion mark. This would be most feasible if the legislation remained narrowly focused on defense.

However, even this more limited goal faces significant obstacles. Marcus expressed skepticism that a second reconciliation bill will pass at all, pointing to a growing list of competing priorities all vying for the same legislative pathway.

Why the Plan Could Collapse

The push for increased defense spending is not happening in a vacuum. The reconciliation process is also being targeted for several other major initiatives:

• President Trump has shown interest in using it to pass consumer stimulus checks.

• House Speaker Mike Johnson has discussed separate healthcare legislation.

• Fiscal conservatives are expecting to use the process to pursue entitlement cuts that were excluded from previous budget agreements.

According to Marcus, these colliding demands create a political logjam. With a narrow and "restive" Republican majority in the House, the ambitious effort to dramatically expand defense funding is likely to "collapse under its own weight."