- Canadian dollar sinks then climbs on latest Trump tariff salvo
- New Trump tariffs sour risk sentiment.
- USD opens higher-EURUSD loses the most.
USDCAD: open 1.4333, overnight range 1.4316-1.4381, close 1.4292, $71.94, Gold, $2902.66
The Canadian dollar traded rather excitedly in the opening hours of Asia. It fell to its session low very early on then recovered most of the losses in Europe. It is not out of the woods after Trump’s latest tariff salvo took aim at worldwide imports of steel and aluminum. Mr Trump plans to levy 25% tariffs on top of existing tariffs on those two items of which Canada is America’s largest supplier.
The latest domestic jobs data was positive any good feeling has faded with the potential negative economic impact of a trade conflict between the US and Canada. The attention will shift to Canada’s response to the US provocation.
Fed Chair Jerome Powell’s testimony before Congress on Tuesday marks the first of his two sessions this week. Questions from Democrats about how tariffs may influence interest rates could make the Q&A particularly compelling. The US Consumer Price Index (CPI) is set for release on Wednesday, and it’s not expected to prompt the Federal Reserve to cut rates in March. Meanwhile, rising global tensions have driven safe-haven demand for gold, pushing it to new record highs.
Equity markets showed a mixed reaction to the latest US tariff announcements. Asian equities reflected varied performances, with Japan’s Topix and Australia’s ASX 200 both slipping slightly by 0.15% and 0.34%, respectively. Hong Kong’s Hang Seng Index, however, posted a strong gain of 1.84%. European markets followed a positive trend, led by a 0.51% increase in the UK’s FTSE, while S&P 500 futures pointed upward by 0.45%.
EURUSD is on the defensive in a 1.0286-1.0335 range, with traders remaining unimpressed by ongoing tariff-related developments. Broader concerns include widening interest rate differentials, as the European Central Bank (ECB) is expected to implement further rate cuts, whereas the Federal Reserve’s policy remains unchanged. Additionally, EU officials are still contemplating how to respond to US tariffs.
GBPUSD bounced in a 1.2371-1.2421 range, showing signs of consolidation after recent declines linked to Friday’s US jobs data and a dovish Bank of England rate cut. However, some support emerged from selling in EURGBP, as the EU is perceived to be more vulnerable to tariff impacts than the UK. The pair continues to trend downward while remaining below 1.2500.
USDJPY climbed to 151.25 to 152.24 in response to tariff announcements and lingering strength from the US nonfarm payrolls report. Initial optimism from comments by Prime Minister Ishiba, who hinted that Japan might avoid higher tariffs, quickly faded.
AUDUSD traded in a 0.6237-0.6284 range, initially gapping lower at the Asian open following news of US tariffs. However, the move was soon reversed. Today marks the start of China’s retaliatory tariffs on US imports, which could limit gains in the Australian dollar amid trade war concerns.
The Economic calendar is empty.
