The foreign exchange market continues to remain volatile overnight with the high beta G10 currencies staging strong rebounds after heavy losses since last week. The best performing currencies have been the Australian and New Zealand dollars alongside the Norwegian krone which have all strengthened by 1% or more against the US dollar.
U.S. President Donald Trump is due to appear shortly at the White House Rose Garden for a "Liberation Day" ceremony where he is expected to announce sweeping tariffs that could escalate a trade war and upend the global economy. Trump has kept the world guessing ahead of the 4 p.m. ET event about the details of the new tariffs, which are expected to prompt countermeasures from trading partners.
Latest round of tariffs will come into effect on 5 and 9 April. Donald Trump announced the imposition of a 10% baseline tariff on all imports to the United States from 5 April. For countries with which the United States has the biggest trade deficits, higher, individualised reciprocal tariffs will take effect on 9 April.
Investors are nervously waiting on the announcement of US President Donald Trump’s tariffs. With reports that deliberations on the tariffs are still ongoing, even with hours left to their unveiling, as well as speculation about the form they will take, investors remain uncertain.
Ahead of the tariff announcements markets are trading cautiously. Asian stock markets are marginally higher whilst European futures are indicating a marginally softer opening. UST yields are up but have mainly been going sideways during Asian hours and the Eurex complex is essentially unchanged from last night.
The markets remain on tenterhooks ahead of today's long-awaited announcement of Donald Trump's reciprocal tariffs. This decision could heighten concerns about growth, both in the United States and at world level.
The US administration is poised to announce a new round of “reciprocal” tariffs on 2 April after imposing a range of tariffs on China, Mexico, and Canada, a separate set of tariffs on steel, aluminum, and derivative products, and newly announced levies on autos and auto parts.
Hopes and fears surrounding US tariffs continue to keep the market on its toes. Yesterday, the hope that the next wave of US tariffs would finally be more limited and targeted, combined with a very solid US services ISM report, fuelled a rebound by US risk assets (led by US techs) and the US dollar, and pushed US bond yields higher in a pro-growth configuration.
PMI data released today will be closely scrutinised to gauge how the eurozone economy has navigated uncertainty triggered by Trump’s tariffs threats. Besides some sentiment effect, it is too early to assess the impact on the economy of Germany’s bold policy response to recent geopolitical events, with a commitment to heavily invest domestically.
Diplomatic efforts have intensified to stop the fighting between both Russia and Ukraine as well as Israel and Hamas. But a durable resolution to both conflicts will not be easy to achieve. The public disagreement in the White House between President Trump and his Ukrainian counterpart underlined the challenges.
China retaliated swiftly against fresh U.S. tariffs with hikes to import levies covering $21 billion worth of American agricultural and food products, moving the world's top two economies a step closer towards an all-out trade war.
Italy’s primary balance for 2024 proved to be better than expected, mitigating the increase in the public-debt ratio.
• As we had expected, the EURGBP spike in January—which was sparked by UK-idiosyncratic risks—has reversed, and we expect the pair to edge lower over the year toward 0.82.
Canada's main stock index closed lower as escalating global trade tensions fueled risk-aversion, with strong bank earnings failing to boost market sentiment.
The S&P/TSX composite index fell 0.79% to end at 25,128.24, following three consecutive sessions of gain.
The U.S. dollar was rose 0.75% against its Canadian counterpart to C$1.4445, after touching its weakest intraday level since February 4 at 1.4442. It was the fifth straight day of declines for the currency.
Unlike previous US trade memoranda, the proposed action to tackle China’s dominance in maritime, logistics, and shipbuilding is different. It could lift port call fees or cause inefficiencies in supply lines, affecting US importers, exporters, and consumers.
