North American Summary and Highlights 4 March
Overview - Tariff concerns saw equities plunge early in North America, but a recovery followed, assisted by German plans to lift the debt break for defense spending, which lifted EUR/USD in particular.
North American session
Early trade saw equities falling sharply on tariff concerns and USD/JPY fell to a low of 148.10. However, equities erased most of the losses, and EUR/USD got a boost on a German plan to reform the debt bake to allow for a EUR 500bn defense fund. Reuters also reported that Trump was planning to announce minerals deal with Ukraine in his evening address to Congress. EUR/USD advanced from an early dip below 1.05 to above 1.06. EUR/GBP moved up to near .83, but GBP/USD rallied to near 1.28 from near 1.27. USD/JPY recovered above 149.
USD/CAD was volatile as PM Trudeau detailed Canada’s retaliatory tariffs, prompting Trump to threaten still more US tariffs in response. After bottoming near 1.44, USD/CAD rose to 1.4540 before correcting back near 1.4470 as risk appetite improved. AUD/USD found support near 0.62 and rallied above .6250 as AUD/CAD reached .9050. There was no significant data, but Fed’s Williams said tariffs would have a high pass-through to consumers.
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 form Tuesday, 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.