North American Summary and Highlights 6 March

North American session

EUR/USD picked up after the as expected 25bps ECB easing with limited forward guidance raising doubts about the scope for further moves. From slightly below 1.08 EUR/USD peaked slightly above 1.0850, before eventually returning to levels seen before the decision. 

Comments from Commerce Secretary Lutnick that tariffs on USMCA goods from Canada and Mexico would be delayed by a month triggered a sharp slide in USD/CAD from near 1.4350 to near 1.4250. Trump confirmed this for Mexico, and later for Canada. As markets waited for the Canada confirmation USD/CAD crept back to 1.43. A bounce in equities on the Lutnick comments also faded, as did a bounce in USD/JPY above 148. Confirmation of the Canada delay got only a limited response. Trump stated there would be no USMCA exception for autos in April.  

US initial claims corrected a preceding sharp rise falling to 221k from 242k. The US recorded a record trade deficit in January while Canada’s trade surplus increased in an attempt to beat threatened tariffs.  

European morning session 

JPY and CHF strength were the main features of the European morning. USD/JPY fell a big figure to 147.80, while USD/CHF fell 35 pips to 0.8865. EUR/USD, GBP/USD and AUD/USD were all slightly softer as the European equity market strength of the last few days saw a correction.  

However, the SEK kept pace with the strength of the JPY, with EUR/SEK falling 9 figures to 10.90 after the stronger than expected flash Swedish February CPI data. This showed a 0.9% m/m 2.9% y/y gain in the targeted CPIF, well above the market consensus and triggering further gains in Swedish yields as the market priced out any expectations of further Riksbank easing.  

EUR/GBP continues to edge higher helped by a sharp drop in the UK construction PMI, which showed the fastest downturn since May 2020. The Eurozone construction PMI also fell.