The Morning Update

Tuesday March 25th, 2025

Written by:
Paul Harrison

The USD is holding steady, oil prices are firm, equity markets are up, and US yields are rising on tariff optimism. The USD held near three-week highs following strong US services data on Tuesday and cautious optimism onApril 2nd tariffs. Equity markets gained as risk sentiment improved on signs that trade sanctions will be narrower than feared. “Investors remain cautious about the forthcoming tariff policies,” said Graham Chin, investment strategist at EBSI Private. “The lack of detailed information contributes to ongoing uncertainty, leaving many investors on the sidelines.” Elsewhere, oil prices extended gains on supply concerns after President Trump’s order that countries buying oil from Venezuela could face secondary tariffs and risk disrupting flows to refiners in China, India and Spain. Bitcoin weakened to $87k, while gold and silver were firm in early trading. Today sees a light economic calendar, with investors focusing on US Consumer confidence and Feds Williams& Kugler speeches to help provide intraday direction to currency markets.

In the news. US and Russia hold talks about a Black Sea ceasefire. Greenland's government hits back at Trump over US visit to Arctic island. Trump administration reviewing how its national security team sent war plans to a magazine editor. Stock futures edge lower after major averages post back-to-back gains. Trump pledges auto and pharma tariffs in 'near term.' sowing more trade confusion. China invites US business leaders to Beijing as it tries to decipher Trump's trade plans. Saskatchewan reverses decision to ban 54 American-branded liquor products. Tech chiefs and Foreign leaders urge Trump to rethink AI chip curbs.

In currency markets. Currency markets are mostly steady, holding within tight trading ranges as investors appear sidelined, looking for greater clarity on the US April 2nd tariffs. JPY edged higher following the BoJ minutes showed policymakers discussed rate hikes expected in Q3. CNY slipped by 0.1%, while Asian currencies are flat on average against the USD. Trading currencies are mixed, with CHF down 0.1%, CHF flat, NOK & MXN up 0.1%, AUD firmed 0.2%, JPY gained 0.25%, and ZAR & SEK strengthened by 0.4% against the USD.

In commodity markets. Oil firmed by 0.6%. Natural Gas Prices rallied by 1.1%. Gold prices up 0.4%. Copper & Silver prices strengthened by 0.85%. Wheat prices eased by 0.3% and Soybean prices weakened by 0.4%.

CAD holds steady in early trading, finding support from strengthening oil prices and helping to offset a firming USD and ongoing uncertainty ahead of fresh tariffs on April 2nd. Domestically, with the lack of any key Canadian economic releases this week, investors are focused on the 3rd day of election campaigning. Intraday, we expect the loonie to hold within current ranges ahead of Thursday’s US GDP, CAD GDP and the keyUS inflation report on Friday.

EURCAD is sidelined, holding near monthly lows as investors await updates on US retalatory tariffs on April 2nd.

EUR stalls, straddling 1.0800 following the German sentiment data. The euro remains under pressure but is off monthly lows against the USD despite the German IFO Business Climate improving less than expected in March. Investors will focus on the Ukraine-Russia ceasefire talks mediated by the US. The US Consumer Confidence and Fed comments will be monitored closely throughout the day to provide direction for the single currency.

GBPEUR holds steady in early trading, while the pound continues to edge off March lows and uncertainty of tariffs is helping to provide an underlying support to the pound.

GBP retests 1.2950, but trades cautiously ahead of the UK budget, and tariff uncertainty. Investors remain cautious ahead of Wednesday's UK Budget with markets not expecting any tax increases and no return to austerity even within this "Changed World." The Bank of Canada Governor Bailey said on Monday that they face a challenge to raise the potential growth rate of the economy. Intraday, we expect the pound to within its current trading range unless we see a print outside of expectations for the US Consumer Confidence report.