Good morning
US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place at the weekend.
In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.
This will be until Sunday 30th when we change our clocks in the UK.
Trumps on-off tariff policy continues to unsettle the markets. US equity markets dropped once again as Trump continued his war on trade. Yesterday he said he would impose an additional tariffs on Canada in response to Ontario’s electricity price increase. He also said he would shut down automobile manufacturing in Canada. USDCAD traded to 1.4520 as incoming Canada PM Carney said the tariffs are an attack on Canada and that they will not back down until the US shows some respect and commits to free trade.
Some backtracking followed on both sides, Trumps team saying no new tariffs had actually been signed, and then Ontario’s Ford said he would not move forward with his price increases. USDCAD fell to 1.4380, however it is back up at 1.4450 as Trump failed to confirm the tariff reversal. Separately, BoC meet today, a 25bps cut to 2.75% is widely expected, something of an insurance policy against a possible trade war. A 50bps cut had, for a while, been touted a while ago but the market sees this as just an outside chance for now. I’m not so sure, and wonder whether an overnight 1.4500 usdcad call could be a decent bet at around 20 cad pips.
The EU have said they will restore tariffs on certain US goods, and impose some new tariffs, from 1st April in response to US actions. Also in Europe, the Portuguese government has collapsed after the PM Montenegro lost a confidence vote following allegations of corruption in his family business. Another general election, the third in three years, will take place. Montenegro came into power in March 2024 after the previous PM, Costa, stepped down after an investigation began on certain members of his administration. Costa didn’t disappear off the scene mind you, he is now the President of the European Council.
Trump imposes and then reverses tariffs at such a rate it is difficult to know what is actually in place, what may come into place and what is unlikely. Tariffs have been met with disapproval at home and abroad. US business owners and lawmakers have reportedly been calling the White House demanding action is taken to calm markets by having a more focussed and predictable tariff agenda. Meanwhile Australia has said tariffs are unfriendly and entirely unjustified.
USDJPY had a bit of a volatile day, trading down to 146.55 early on Tuesday morning but has since rallied to 148.60. Difficult to put a finger on what was behind the move other than the same uncertainty over the global economy. I’d have expected to see some comment on interest rates perhaps, but I haven’t seen any talk suggesting an interest rate rise in June or possibly July is less likely. Slightly lower wage increases from car manufacturers may also have impacted JPY.
After talks with US in Saudi Arabia, Ukraine has said it is ready for a thirty day ceasefire, which now leaves the ball firmly in the Russian court. I still cannot see Putin just stopping, but lets hope I am wrong and that some peace negotiations can begin. US have reopened access to their intelligence for Ukraine, and minerals negotiations are soon to take place. Trump thinks he may speak to Putin soon. The hopes for some sort of peace pushed EUR higher, with EURUSD reaching a high of 1.0945 (now 1.0920) and GBPEUR down to mid-1.18’s.
US CPI is out this afternoon, perhaps not the key driver at the moment but expectations are for headline to drop 0.1% to 2.9% and core to also drop 0.1% to 3.2%. We’d probably need to see a larger decline to really impact the US dollar. Also on the calendar is a Fed official speaking which is rather odd given we are int eh Fed’s blackout period ahead of next weeks rate meeting. Perhaps I’ve got that wrong.
In sport, Liverpool were dumped out of the Champions League as they lost to PSG on penalties. Arsenal and Aston Villa are in action this evening, both teams holding a decent goal advantage from the first leg. Leeds Utd play tonight as well after both Sheffield Utd and Burnley could only manage draws in their matches last night.
I feel a little sorry for race-goers as Cheltenham enters its second day. It perhaps started one week too late given the impressive weather we had last week. I have seen reports of snow in Cheltenham today, let’s hope it warms up for the racing.
Have a great day…
- 12.30 US CPI
- 13.45 BoC rate announcement
- 13.45 ECBs Nagel speaks
- 14.30 BoC press conference
- 15.15 ECBs Lane speaks
- 17.35 Feds Musalem speaks
- 18.00 US monthly budget statement
- 00.00 AUS consumer inflation expectations
Comments