– Trade war risks soar.
– Canada and US data will take a back seat to tariff news.
– US dollar opens with gains across the board.
USDCAD: open 1.4440, overnight range 1.4429-1.4453, close 1.4436, WTI 69.38, Gold 262.92.
The Canadian dollar sank quickly and deeply yesterday after President Trump reaffirmed his intention to impose 25% tariffs on non-energy imports and 10% energy tariffs on imports from Canada. The news was not a total surprise although some traders believed the threat to just be a negotiating tactic and were not positioned for the Canadian dollar fall.
Canada’s Q4 2024 GDP is expected to show an increase of 1.9% y/y today. It will be a non event as the risk of a prolonged US/Canada trade war will greatly overshadow the results.
The same holds true for today’s US Personal Consumption and Expenditures data. It is expected to have eased to 2.6% y/y form 2.8%. Normally, that would be a good result and support another Fed rate cut. However, the inflationary impact from a trade war suggest todays data will only have a minimal, if any impact on markets.
WTI oil fell to 69.28 from 70.18 on the back of an elevated risk of weaker demand from China. The prospect of a global trade war and weaker economic growth in China suggests lower demand for crude.
EURUSD ranged between 1.0381 and 1.0408 overnight. EURUSD suffered downward pressure following announcements from President Trump latest tariff volley and also reciprocal tariffs which will be implemented on April 6th. Ongoing geopolitical tensions involving Ukraine and Russia continue to contribute to market uncertainty. The tariff news overshadowed the release of Eurozone economic data.
GBPUSD traded in a 1.2573-1.2611 range. UK Prime Minister Keir Starmer failed to garner any tariff extensions when he met President Trump , despite offering him an invitation for a second state visit with King Charles.
USDJPY dropped then rallied in an active overnight session. Trump’s tariff announcements sparked safe-haven demand for the Japanese yen. The USDJPY losses were recouped following the release of Tokyo inflation data, which was lower than expected (2.9% year-over-year compared to 3.4% in January), and stronger-than-expected retail sales figures.
AUDUSD suffered from trade war blues and traded negatively in a 0.6209-0.6239 range. Trump’ surprise doubling of tariffs on China (form 10% to 20%) fueled the sell-off.
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