Following an exceptionally volatile week, markets open with a clear shift in tone: the U.S. dollar weaker, oil and equities climbing, and bond yields retreating. Tariffs remain a key focus for market participants. On Sunday, President Trump defended his sweeping trade measures, declaring that no country is "getting off the hook." He imposed a 145% tariff on Chinese goods and pushed for reciprocal tariffs worldwide. However, amid growing economic concerns, he issued a 90-day pause on most tariffs—excluding China—and granted exemptions for electronics like computers and smartphones. While Trump claims 75 countries have sought deals with the US, China remains a key holdout. Despite U.S. pressure, Xi Jinping hasn't agreed to talks, leaving Trump to reassure Americans that his relationship with Xi will avoid a crisis. However, the standoff risks worsening stock markets and causing economic strain. The rise in U.S. Treasury bond yields and the 4.5% drop in the USD since Liberation Day suggest that investors may be reassessing the safety of U.S. assets. While the U.S. is still considered a safe haven, concerns over economic outlook, fiscal issues, and trade policies could be prompting a shift toward alternative safe assets like gold or other currencies.
News Headlines. Zelensky invited Trump to visit Ukraine before any Russia deal, urging him to see the war’s destruction firsthand and challenging his claim he could end the war quickly. An Israeli airstrike hit al Ahli Arab Hospital in Gaza City, destroying its ICU and surgery units. The IDF said it targeted a Hamas command center. No casualties were reported.
In currency markets. The JPY strengthen (0.24%) supported by concerns over the US-China trade war, optimism for a US-Japan deal, and expectations of BoJ rate hikes. China's trade surplus saw a significant jump in March, likely driven by manufacturers rushing to ship goods to the U.S. before new tariffs took effect. This surge in exports, particularly to the U.S., helped boost the trade balance, as companies sought to secure orders and avoid higher costs. The AUD and NZD both gained against the USD, rising 0.57% and 0.82%, respectively. This morning, Asian currencies are mixed: the CNY dropped by 0.51%, the THB declined by 0.12%, while the MYR rallied by 0.17%. In the emerging markets, the ZAR rallied 1.1% and MXN 0.56% against the USD.
In commodity markets. Oil faces supply concerns and US-China trade war fears, with an OPEC+ supply boost limiting gains, while USD weakness supports oil prices. Gold pulled back from record highs to $3,220 amid profit-taking and strong equity markets. However, US-China trade tensions and expectations of Fed rate cuts are likely to limit downside.
Current level USD Index 99.542 Down 0.34%
USD/CAD extends its decline for a fourth session, trading near 1.3860. The drop is fueled by a weakening USD, pressured by recession fears, inflation concerns, and rising US-China trade tensions. China recently raised tariffs on US goods to 125%, following the U.S. hike to 145%. Notably, USD/CAD has returned to pre-U.S. election levels, reflecting rising uncertainty and fading post-election gains.
Current level USD/CAD 1.3857 Down 0.13%
EUR/CAD is trading near 1.5778, supported by Euro strength amid solid Eurozone data and cautious ECB optimism. Meanwhile, the Canadian Dollar lags due to weaker oil prices and concerns over domestic growth, adding to the pair’s upside momentum.
Current level EUR/CAD 1.5778 Up 0.25%
EUR/USD gains as the USD weakens amid rising stagflation fears, driven by poor consumer sentiment and escalating US-China trade tensions.
Current level EUR/USD 1.0970 Up 0.19%
GBP/EUR Sterling is being affected by the USD de-rating, but euro liquidity is higher, and more assets are likely repatriating to the eurozone. This week, GBP performance will focus on the labor market and inflation data, with downside risks expected.
Current level GBP/EUR 1.1578 (0.8635) Up 0.52%
GBP/USD maintains bullish momentum above 1.3150, supported by ongoing USD weakness, with US-China trade updates in focus.
Current level GBP/USD 1.3185 Up 0.80%
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