Trump's tariff announcements last night rippled through markets driving stocks lower and bonds higher. USD lost further ground, with JPY sweeping up save haven flows. This morning, GBP is also favoured, given the UK has come out relatively unscathed with only 10% tariffs compared to its peers. The base line of tariffs was announced as 10% on all imports to the US, with additional tariffs on around 60 countries. China now has a total of 54%, the EU 20%, Vietnam 46%, and Cambodia 49%. No additional tariffs were imposed on Canada and Mexico. Both China and Europe have already announced that they are preparing countermeasures.
*Daily move - against G10 rates at 7:30am, 03.04.25
** Indicative rates - interbank rates at 7:30am, 03.04.25
The USD sell-off has continued this morning with GBPUSD and EURUSD now trading at their highest levels since October 2024. The EUR has erased last night's losses on the EU’s plans to retaliate, GBP is putting on gains, and so is JPY.
Markets are also pricing-in more rate cuts from the European Central Bank (ECB), Federal Reserve (Fed) and Bank of England (BoE) because of the tariffs and lower growth expectations. Markets are in a very cautious mood this morning and we wait to see additional developments over the next few days and if some of the tension is eased or further exacerbated.
It will be an interesting few days but we do consider the relative weakness of USD an excellent opportunity to buy the currency, as we are are wary of the potential for the Fed to turn more hawkish, touting the inflationary pressures tariffs will have on the economy.
See more about potential rate cuts from the ECB, Fed, and BoE here:
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