The USD weakens, oil prices tumble, equity markets are down, and US yields are mixed due to bigger-than-expected US tariffs. The USD weakened to five-month lows, while the MXN and CAD strengthened after avoiding further tariffs. Meanwhile, the safe-haven JPY and CHF saw increased interest as investors moved away from the USD. A sweeping selloff impacted global equities after the US tariffs proved aggressive and more far-reaching than investors anticipated. The announcement of a minimum 10% tariff on all exports to the US, along with additional duties on its biggest trading partners, including China,Japan, and the EU, heightened fears of retaliatory tariffs and raised concerns about a global recession. Equity market response shows the Stoxx Europe 600fell 1.4%, FTSE -1.15%, Nikkie -2.77%, S&P futures -2.9% & Nasdaq futures -3.2%. Elsewhere, Bitcoin fell 3.75%, while fears of slower growth weighed on commodities, as oil prices tumbled over 3%, while copper, aluminum, and zinc all traded sharply lower. In focus today, US Challenger Job Cuts, Initial Jobless Claims, S&P Global Composite PMI, ISM Services Employment &New Orders Index, and ISM Service PMI will help drive intraday direction to currency markets.
In the news. Stocks tumble as Trump takes the world to the brink of full-blown trade war. Trump will ‘buckle under pressure’ if Europe bands together over tariffs, German Economy Minister.China urges US to immediately lift tariffs, vows retaliation. Gold steadies after hitting all-time high on Trump tariffs. NATO foreign ministers seek reassurance on US commitment to the alliance. Canada and Mexico are not subject to new global rates as the fentanyl tariff is still in place. Warnings of ‘generational ’floods as storm hit US Midwest and South. Wall street futures in a tailspin as tariffs fuel recession fears.
In currency markets. Currency market volatility spiked after President Trump announced bigger-than-expected global tariffs. CNY weakened by 0.5%, while Asian currencies, on average strengthened by 0.5% against the USD. Trading currencies rebounded on the tariff announcements, with CZK, ZAR, JPY and NOK firming 0.9%, MXN gaining 1%, NOK & AUD up 1.25%, CHF strengthening 1.45%, and SEK rallying 1.75% against the USD.
In commodity markets. oil prices weakened by 3.9%. Natural Gas prices flat. Gold prices eased by 0.65%. Silver prices tumbled by 4.6%. Copper prices fell 2.4%. Wheat prices are down 1%, and Soybean prices dropped 1.7%.
CAD tested its strongest levels in 2025 after the US imposed new 25% tariffs on foreign-made cars; however, Canada was exempt from the 10% baseline tariffs applied to many other countries. The loonie strengthened through 1.4200 but is underperforming most of its peers as markets await Canada’s retaliation after PM Carney said that Canada will act with ‘purpose and with force’ to fight new US tariffs. We anticipate that the loonie will continue to be volatile in response to the upcoming US jobs data and inflation report, as well as Canada's reaction to the US tariffs.
EURCAD rallies to fresh multi-week highs as Canada struggles amid tumbling commodity prices.
EUR strengthens to multi-month highs, retesting 1.1100 amid USD weakness. The euro rallied to a six-month high as the single currency benefited from broad USD weakness, with investors fearing a US recession following extensive global tariffs. US President Donald Trump announced that on"Liberation Day," a 10% baseline tariff will be imposed on all imports to the US, effective April 5. The Trump administration will also implement higher reciprocal tariffs on approximately 60 countries classified as"worst offenders," effective April 9. The European Union will be included in this group, facing tariffs of 20%. Intraday sees a flurry of US inflation and jobs data, which could further pressure the USD.
GBPEUR drops to two-week lows as the US/UK trade deal weighs on the pound against its European counterpart.
GBP tests new 2025 high amid increased USD weakness. The pound has rallied from a January low of 1.2100 to break through 1.3100 amid growing concerns that Trump tariffs could push the US into a recession, raising the likelihood of Fed easing and keeping the USD under pressure. Later today, the US Initial Jobless Claims and ISM Services PMI reports will provide insight into the US economic conditions.
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