The Morning Update

The USD rebounds, oil prices tumble, equity markets decline, and US yields are mixed as risk sentiment fades. The USD rebounds from six-month lows, while volatility in currency markets persists, with most major currencies weakening by as much as 1.9% in early trading. Equity markets extended losses to end a volatile week in the post-tariff market rout. The Dow futures and TSX are down, approaching their largest losses since 2020, while the MSCI global benchmark is poised for its most significant weekly loss in seven months. Europe stocks fall another 2.5%, banks crash 7% as tariffs raise recession fears. The Bank of Japan warns about the impact of US tariffs on the Japanese economy. In France, President Macron has called for a pause on EU investments in the US and proposed targeting American tech companies with the bloc’s powerful anti-coercion tool. UBS Global Wealth Management has downgraded its outlook on the S&P 500 and cautioned about increased market volatility due to the effects of reciprocal tariffs. Elsewhere, Bitcoin has rallied 3%, while oil prices tumbled to three-year lows on tariff and OPEC supply concerns. The focus today will be on CAD Net Change in Employment, the Unemployment Rate, US Nonfarm Payrolls, and Fed Chair Powell’s speech to help drive intraday direction in the currency markets.

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In the News. Global stock sell-off deepens after tariff rout. Europe braces for flood of Chinese goods after US tariffs. NATO needs 'road map' for US pivot away from Europe, say Finland. Fitch downgrades China's sovereign debt over spending and tariffs. Trump's sweeping tariffs ignite $2.5 trillion rout on Wall Street. Eight OPEC+ producers accelerate crude oil output hikes, pushing oil prices 6% lower. Tesla investors brace for another year of sales decline as Musk backlash grows. South Korea's Yoon removed from office over martial law. 'Worst-case scenario' for Tech wipes $1.4 trillion from NASDAQ. PM Carney hits back on Trump's tariffs, targeting $35B worth of US vehicles.

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In currency markets. Excessive market volatility persists, with the USD recovering from six-month lows while risk-sensitive currencies decline by over 1%. Safe-haven currencies have regained favour and are the only ones showing positive gains against the USD today. CNY is flat, while Asian currencies slipped by 0.2% against the USD. Trading currencies remain volatile, with NOK tumbling 2.2%, SEK, AUD & NZD weakening 1.9%, ZAR falling 1.5%. MXN dropping 1.2%, JPY firmed by 0.2% and CHF strengthened by 0.45% against the USD.

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In commodity markets. Oil prices tumbled 3.2%. Natural Gas and Silver prices dropping 1.3%. Gold prices down 0.1%. Copper prices weakened by 2.6%. Wheat prices slipped 0.5%, and Wheat prices easing 0.9%.

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CAD weakens, retreating from December 6^th highs, due to a strengthening USD, ongoing tariff concerns, and declining oil and commodity prices. While Canada avoided widespread US tariffs on Wednesday, some of the country’s largest industries continue to fear threats from border taxes. Domestically, GTA home sales dropped 26.5% year over year in March, citing concerns over the economy and job insecurity. Investors will focus on the Canadian unemployment rate, which is anticipated to increase to 6.7% from 6.6%in February. In the US, the critical Nonfarm Payrolls figure is projected to decrease to 135k from 151k in February.

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EURCAD rallies as tumbling commodity prices put additional selling pressure on the loonie.

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EUR recoups early losses as markets shift focus to the US NFP and Fed Chair's speech. The euro retreated from its seven-month highs, slipping from 1.1150 on Thursday to 1.1000 as fresh USD buying returned.The EU’s response to the US tariffs is being coordinated in Brussels, with Commission President Von Der Leyen claiming the EU holds “a lot of cards”,including the strength to negotiate and the power to push back. Intraday markets will be focused on the critical US NFP and Fed Chair Powell’s comments.On Thursday, Fed’s Cook said, “I am watching for evidence that tariffs are driving a persistent increase in price pressures,” adding that she sees more emphasis on upside inflation risks.

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GBPEUR remains under pressure as investors prefer the eurodue to its better liquidity compared to the pound. The euro is anticipated tobe favoured over its peers as it benefits from exiting the USD.

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GBP remains under pressure but holds at 1.3000 ahead of the US key jobs report. Profit-taking and a strengthening USD have added pressure on the pound as investors reposition themselves ahead of the US’s crucial jobs report and Fed Chair Powell’s speech. Investors are increasingly expecting the Bank of England to cut interest rates as the UK braces for a hit to trade and growth following the US’s 10% tariff on UK exports. The expectation of a 25bps rate cut by the BoE at its next scheduled meeting in May has risen to 77% following Wednesday’s tariff announcements. Intraday, the US jobs report will be the primary driver for the pound's direction today.

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