Europe Summary and Highlights 4 March

European morning session

The USD was generally weaker through the European morning, falling fairly evenly across the board. Even the CAD, which fell back on Monday after Trump confirmed a 25% tariff would be imposed from today, rallied strongly, reversing all of Monday’s losses. The JPY has been the strongest currency over the last few sessions, and USD/JPY is once again testing the support area at 148.55/65. But EUR/USD also gained ground, rising 30 pips to 1.0510.

Only the scandis failed to make gains against the USD, with EUR/SEK reversing some of Monday’s sharp losses and EUR/NOK continuing its recent move up.

There was little significant news during the session, with data thin on the ground. Eurozone unemployment was steady at 6.2% in January

Asia session

The risk appetite remains sour as it looks like the U.S. tariffs on Canada and Mexico looks set to be imposed, while Canada is going to retaliate with 25% on 30 billion CAD U.S. import and Mexico is not responding yet . Trump also mentioned increasing the tariff on China to 20% which creates more uncertainty in the market as China  said it would be taking retaliation steps. Major equity indexes are all in the red and see AUD/USD down 0.47% to 0.6195, NZD/USD is also down 0.24% while USD/CAD rose 0.17%.

The key of JPY movement on Tuesday lies not in the labor data but the threat from Trump on Japan devaluing its currency. Trump's remark on China and Japan's weak currency to be a type of tariffs have seized market participants attention as such would likely trigger more action from him despite both Japanese FM Kato and PM Ishiba denies actively devaluing JPY. While we all know his ultimate goal is on narrowing trade deficit, the uncertainty of policy has kept risk asset on check and JPY strengthens. The JPY continue to strengthen on Tuesday's Asia session and see USD/JPY down 0.24% at 149.12 with a session low at 148.60. Else, EUR/USD is down 0.07% and GBP/USD is down 0.05%.