The USD is easing, oil prices remain steady, equity markets are rising, and US yields increase as risk sentiment improves. The USD drifts from its three-week highs against its G10 peers as investors await clarity on US President Trump’s next round of tariffs for April 2nd. Equity markets opened higher, and US futures followed the S&P, which snapped a four-week losing streak, with optimism improving that the April 2nd tariffs would be more targeted than previously suggested by the US President. “Markets have taken some comfort from news that the next stage of the Trump administration’s tariff regime will involve targeted tariffs,” said Daniel Murray, CEO of EFG Asset Management in Zurich. “This raises the possibility that some sectors and countries may perform better than others, thereby boosting market optimism.”Elsewhere, oil prices hold steady as markets weigh sanctions on Iran and Russia-Ukraine ceasefire talks. Bitcoin prices head higher, supported by broader market optimism. Markets will be focused on several key economic releases this week, Monday US S&P Global Manufacturing & Services PMI and BoE Bailey Speech. Tuesday US Consumer Confidence. Wednesday UK CPI & US Durable Goods orders. Thursday, USD GDP report, Initial Jobless Claims & ECB President Lagarde Speech. Friday, UK GDP, EU Consumer Confidence, and the US Core Personal Consumption Expenditures Price Index.
In the news.US Planning to exclude sector-specific tariffs on April 2nd, Bloomberg News & WSJ report. Carney calls snap election for Canada citing 'crisis' caused by Trump. Turkey formally arrests Erdogan rival in escalation of political crackdown. US-Ukraine talks resume in Saudi Arabia after Trump envoy praises Putin. EU watchdogs warn that weakening rules risks another financial crash. WHO calls immediate action as report shows 10% rise in Child TB infections in European region. China touts business potential to US companies despite 'rising instability.' 23andMe files for bankruptcy protection as CEO steps down. South Korean court reinstates impeached PM Han Duck-soo as acting president.
In currency markets. Currency markets edge higher amid a softening USD, but investors remains cautious ahead of next weeks US tariff announcements. The pound improves on better than expected services and composite PMI reports. CNY & Asian currencies on average eased by 0.1%. Asian currencies are mixed with JPY down 0.25%, CHF & SEK flat, NOK up 0.1%,ZAR & MXN firmed by 0.2%, and NZD & AUD strengthened by 0.4% against USD.
In commodity markets. Oil prices up by 0.3%. Natural Gas prices tumbled by 1.1%. Gold prices firmed by 0.2%. Silver prices gained by strengthened by 0.4%. Copper prices rallied by 0.65%. Wheat prices weakened by 1% and wheat prices fell by 0.3%.
CAD opens unchanged from Friday's close, maintaining three weeks of steady gains as market optimism grows that the US tariffs proposed onApril 2nd will provide a more targeted approach. Domestically, Friday's retail sales fell short of expectations, declining 0.6% for the first two months of 2025. This week features a light Canadian economic calendar, so attention will shift to the Canadian Federal Election and US tariff updates. Intraday, the focus will be on the US Manufacturing & Services PMI to help provide direction for the loonie.
EURCAD extends gains investors favour the euro with growing optimism that US tariffs will have a lesser impact that originally anticipated for the EU.
EUR continues to gain traction as risk-on sentiment improves. The euro has ended a three-day decline, testing 1.0850 again against a weaker USD thanks to improved risk sentiment. Investors are adopting an optimistic outlook that the US reciprocal tariffs will be less punitive and more targeted than originally anticipated. According to a report from the WallStreet Journal, the White House is adjusting its approach to tariffs aimed at countries with significant trade ties to the US. Intraday US PMI report will help drive direction for the single currency.
GBPEUR rallied in early trading, with the pound finding support from better than expected UK PMI's report.
GBP breaks above 1.2950 following UK PMI report. The pound extends gains against its G10 peers on the combination that the UK will avoid US April 2nd tariffs, alongside better than expected business activity. The UK PMI report today highlighted that the UK business activity in the private sector expanded at a stronger pace that expected in March. Intraday the US PMI report and the Bank of England Governor Bailey speech will help provide direction to the pound today.
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