The Morning Update

The USD remains steady, oil prices are firm, equity markets are down, and US yields are easing amid tariff uncertainties. The USD steadies despite sliding treasury yields, as the uncertainty around tariffs and growing global recession fears help to strengthen the safe-haven JPY in early trading. Global equity came under renewed selling pressure in early trading after President Trump indicated that tariffs would essentially cover all countries, raising concerns that a global trade war would increase the risk of recession. The Stoxx Europe 600 fell by 1%, S&P futures declined by 0.7%, and the Nikkei plummeted over 4%. “For the first time in years, we find ourselves genuinely worried about risk assets,” remarked the head of rates markets at Barclays. Elsewhere, Gold hits a record high, on track for its best quarter since 1986 amid growing risk-off sentiment. Oil prices rose as markets evaluated the likelihood of tariffs on Russian oil materializing. Bitcoin fell by 1% to just below $81.5k, while both silver and gold gained strength. The focus this week is Monday, German CPI, Tuesday, AUD, RBA Interest Rate Decision, EU CPI, CAD Manufacturing PMI, and the US Manufacturing PMI. Wednesday, US Tariff Announcement, US ADP Employment Change. Thursday,China Calxin Services PMI, US Initial Jobless Claims, US ISM Services PMI. Friday, CAD Net Change in Employment, CAD Unemployment rate, US Average HourlyEarnings, US NFP, and Fed Chair Powell’s Speech.

In the news. Global stock markets tumble as Trump’s tariffs loom. France's Le Pen found guilty in graft trial in ruling that could end her career. Germany’s spending push drives up borrowing costs across the Eurozone. Trump says he is ‘not joking’ about seeking a third term in office. Trump threatens secondary tariffs onRussian oil without a deal on Ukraine. Dow futures drop 200 points as jittery Wall Street awaits 'Liberation Day.' Goldman sees Trump tariffs spiking inflation, stunting growth and raising recession risk. Russia pounds Kharkiv for a second night in row, Ukraine says. Myanmar rescues, sign of life in Bangkok rubble raise hopes after deadly quake.

‍

In currency markets. ZAR strengthens in early trading as gold prices hits fresh peak. JPY strengthens on safe-haven buying, while MXN & CAD come under pressure on tariff fears, and AUD weakens ahead of RBA interest rate decision. CNY is up 0.15%, while Asian currencies on average eased by 0.2% on average against the USD. Trading currencies are mixed, with NOK tumbled 1%, SEK weakening 0.8%, CZK, NOK, ILS & AUD dropping 0.5%, MXN & CHF falling 0.3%, JPY strengthening 0.3%, and ZAR rallying 0.45% against the USD.

‍

In commodity markets. Oil & Silver are up 0.1%. Natural Gas prices rallied by 3.5%. Gold prices strengthened by 1%. Copper prices tumbled 1.9%. Wheat and Soybean prices are flat.

‍

CAD eases in early trading as investors remain cautious ahead of the announcement of fresh US tariffs on Wednesday. We anticipate that the loonie could experience increased market volatility this week due to new threats of tariffs on Russian oil, the uncertainty surrounding the impact of Wednesday's announcements, and Canada's response level. Domestically, Tuesday's S&P Global Manufacturing PMI and Friday's CAD unemployment numbers will be the key economic drivers for the loonie. We expect the loonie to remain under pressure this week, with the potential for a retest of 1.4450.

‍

EURCAD strengthens in early trading, with markets anticipating Wednesday's US tariff announcements will have a greater negative impact on the Canadian economy.

‍

EUR stalls, straddling 1.0800 ahead of the key German inflation report. The euro remains resilient in the face of Wednesday's US tariff announcements as investors remain sidelined ahead of today's important German inflation report. Domestically, the German Harmonized Index of Consumer Prices year-over-year is expected to ease to 2.4% in March, down from 2.6% in February. Early this morning, German retail sales exceeded expectations, coming in at 4.9%, a significant increase from 3.3% in January. ECB President Lagarde commented today that Trump's tariff policy would lower eurozone growth by at least 0.3%. At the same time, Goldman Sachs forecasted that the ECB will cut by 0.25% three times between April and July.

‍

GBPEUR is flat, as investors are sidelined ahead of Wednesday's US tariff annoucnements.

‍

GBP starts the week unchanged, trading within a tight range around 1.2950. Concerns that US tariffs could reignite inflation and dampen growth in the UK is expected to keep pressure on the pound ahead of Wednesday's tariff announcement. PM Starmer & President Trump spoke on Sunday about a UK-US trade deal, with Downing street described the negotiations as "productive." President Trump himself has dangled the prospect of a "great" deal that could help the UK avoid, or at least soften, the blow caused by the tariffs the US President has promised. This week, alongside US tariff news, investors will be focused on this weeks key US economic reports including US ISM Manufacturing & Services PMI, and US NFP to provide an overview of the current state of the US economy.