North American Summary and Highlights 4 April

North American session

Early on China’s announcement of 34% retaliatory tariffs on the US saw USD/JPY plunge to near 144.50 from near 146.50, and EUR/USD saw a more modest rise back above 1.10. After that it was mostly a picture a rising USD while equities saw another steep plunge, with USD/JPY moving above 147. EUR/USD losses were modest, to near 1.0950, EUR holding up better than GBP. AUD/USD fell sharply, testing 0.60 while USD/CAD rose above 1.42. 

The main news items of the day, non-farm payrolls and a speech by Fed’s Powell, were USD supportive but did not trigger sharp responses. Payrolls were stronger than expected with a 228k increase but with 48k of net negative revisions, while unemployment rose to 4.2% from 4.1%. Average earnings rose by a modest 0.3%, and less before rounding. Powell stated that tariffs were greater than expected and saw risk that a boost to inflation could prove persistent, though the policy path was unclear. Canada saw a weak employment report, employment down 32.6k and unemployment up to 6.7% from 6.6%. 

European morning session 

The USD managed a general recovery through the European morning, gaining strongly across the board. EUR/USD lost a big figure, slipping to 1.0985, and there were similar declines in GBP and AUD. CAD and JPY held up better, with both USD/JPY and USD/CAD gaining around half a figure. The CHF was the best performer, with USD/CHF little changed, as markets retained a risk averse tone, with equities falling further.  

The SEK was the worst performer in the session, with EUR/SEK up 1% to 10.95. The rise was in part due to the general risk aversion and unwinding of positions, but the weaker than expected Swedish CPI data also contributed. The targeted CPIF measure fell to 2.3% y/y against a consensus of 2.6%. Other data was German manufacturing orders, which was weaker than expected at flat on the month in February, but the January data was revised a little higher.