Europe Summary and Highlights 3 April

European morning session

The USD extended declines through the European morning, with the riskier currencies slightly outperforming the JPY, although the CHF was the strongest performer. EUR/USD gained 90 pips to 1.1040, AUD/USD gained 50 pips to 0.6340, while USD/JPY fell 60 pips to 146.40. USD/CHF fell more than 1% to 0.8620. The SEK also made strong gains, with EUR/SEK down 3 figures to 10.69.

FX moves were driven by equity market weakness, with European equities down around 2.5%, while US S&P 500 equity futures were down 3.2%. Bond yields were also all substantially lower, with European 5 year yields down around 10bps and US around 15bps. The moves were all driven by the tariff increases announced by the US overnight. Thus far there has been no confirmed retailiation response.

Datawise there was Swiss CPI, which was weaker than expected in March at 0.3% y/y, unchanged from February. Eurozone services PMI was revised slightly higher to 51.0, while UK services PMI as revised lower to 52.5.

Asia session

Trump's tariff finally comes to light and hits everyone with at least 10% with some countries getting hit with 50%+ tariffs. Risk asset drop on its mark significantly and market participants are closely watching for other countries reaction. USD/JPY is down more than one percent at 147.56 as U.S. Treasury and JGB yields opened sharply lower.

It was a bloody opening for global equities as Trump's tariff hit. U.S. and Chinese equities have tried to close the gap while Hong Kong and Japanese equities stayed deep in the red. It is understandable after the barrage of tariffs Trump imposed on almost everyone. Despite USD performing individually, AUD/USD is dropping towards 0.6268, a 0.46% losses for the session, NZD/USD down 0.2% to 0.5734 while USD/CAD is close to unchanged. European currencies gained with EUR/USD up 0.56% and GBP/USD up 0.43%.