April 9, 2025
- Global equity indexes plunge and Treasury yields climb
- China retaliates – raises tariffs to 84% on US imports, effective Thursday
- US dollar sinks as investors flee greenbacks-commodity bloc hit by trade risks
FX at a Glance
USDCAD: open 1.4206, overnight range 1.4157-1.4274 close 1.4264
USDCAD has enjoyed a rollercoaster ride this week as in bounced between 1.4140 and 1.4300. The overnight session wasn’t much different, but USDCAD still managed to open, little changed from yesterday. That changed after China announced retaliation tariffs on US imports. USDCAD blew through the overnight low of 1.4206 and dropped to 1.4157, where it sits at 5:42 am PDT.
This could change if Trump notices that Canada defied his “no retaliation” edict. Canada slapped on a 25% tariff on all vehicles imported from the US, effective today. There could be blood.
On the other hand, the emerging “Sell-America” trade theme—where funds trim U.S. equities, reduce dollar allocations, and diversify away from American risk—could act as a brake on USDCAD gains. The Canadian dollar may be viewed as safer proxy-for North American risk.
WTI fell to 55.38 from 58.39 thanks to an onslaught of negative influences. Opec’s plan to boost production substantially beginning May1, broad based US dollar weakness and the rising risk of a global recession are weighing on prices.
The FOMC minutes from the March 19 meeting are due but Trump’s tariff bombshells have relegated the data to the back burner.
The Canadian economic calendar is empty.
USDCAD Technicals
The intraday USDCAD technicals are bearish. USDCAD is in a minor downtrend channel between 1.4230 and 1.4150 (hourly chart). A topside break targets 1.4270 while a move below 1.4150 suggests further losses to 1.4100.
Longer term, USDCAD is bearish while trading below the 100-day moving average at 1.4288. A break below 1.4100 targets 1.3960.
For today, USDCAD support is 1.4150 and 1.4110. Resistance is at 1.4220 and 1.4280.
Today’s Range: 1.4150-1.4250
Chart: USDCAD 1 day
China Hits Back
China just announced (at 7:00 am EDT) an additional 50% tariff on all US imports, effective on Wednesday, bringing the cumulative total to 84%.The commerce Ministry said, “China will firmly defend its interests, multilateral trade system and international economic order.”
Investors are Bleeding
Wall Street gave up earlier gains and closed deep in the red following Trump increasing China tariffs to 104% effective today.
Asian equity indexes took up the baton with Japan’s Topix. plunging 3.40% and Australia’s ASX 200 dropping 1.80%. Chinese indexes shrugged off the drama and the Hong Kong Hang Seng index rose 0.68%.
The news of China’s tariff retaliation accelerated European equity losses. As of 5:47 am PDT, the UK FTSE 100 is down 3.28%, the German DAX has lost 4.28% and S&P 500 futures have dropped 2.02% The US 10-year Treasury yield climbed to s 4.51% from 4.33% as in 4.41% in NY.%. The CBOE Volatility Index (VIX) has spiked from yesterdays low on increased recession fears.
EURUSD
NY Open: 1.1044, Overnight Range: 1.0951-1.1090
EURUSD is the currency of choice after global investors soured on the US dollar. It is the second most liquid currency and the European Union is not being ruled by one man with an “executive order” book. EU officials said that the second phase of its retaliatory measures against Trump would be revealed next week.
GBPUSD
NY Open: 1.2820, Overnight Range: 1.2762-1.2864
GBPUSD rallied on the back of the “Sell America” trade in the belief that Trump’s tariffs and his escalation of the US/China trade war will sink the US economy into a recession. The Bank of England meeting minutes had a dire warning about the impact of Trump’s tariffs, saying, “This had contributed to a material increase in the risks to global growth and a weakening of the central outlook, as well as increased uncertainty over the outlook for inflation globally.”
USDJPY
NY Open: 145.33, Overnight Range: 144.58-146.39
USDJPY plunged in Asia due to broad-based safe-haven demand for yen and a steep drop in Japanese stock markets. Traders ignored the spike in the US 10-year Treasury yield. The Japanese government has failed to respond to Trump’s tariffs in hopes being timid will improve trade negotiations. Japanese officials said that authorities were “watching currency moves with a high sense of urgency.”
AUDUSD
NY Open: 0.6012, Overnight Range: 0.5915-0.6029
AUDUSD plunged to levels last seen in the COVID era in the wake of Trump’s trade war escalation with China. Prices rebounded into the US open on profit-taking and because of China’s failure to retaliate—for now.
NZDUSD
NY Open: 0.5551, Overnight Range: 0.5486-0.5565
NZDUSD dropped to its session low on the heels of Trump’s China tariff boost and after the RBNZ cut the OCR rate by 25 bps to 3.50%. That was no surprise. However, the statement noted, “The recently announced increases in global trade barriers weaken the outlook for global economic activity. On balance, these developments create downside risks to the outlook for economic activity and inflation in New Zealand.” ASB Bank expects another 75 bps of easing this year to counter the weakening global outlook.
USDMXN
NY Open: 20.8434, Overnight Range: 20.7565–20.9475
USDMXN rallied yesterday due to renewed risk-off sentiment, and it extended those gains overnight before retreating to its Tuesday closing level. Mexican inflation is expected to rise 0.31% (previous
0.28%) while core inflation falls to 0.43% from 0.48%.
FX high, low, open (as of 6:00 am ET)
China Snapshot`
PBoC fix: 7.2066 vs exp. 7.3348 (Prev. 7.2038).
Shanghai Shenzhen 300 rises 0.99% to 3686.79.
The PboC allowed for a higher fix which implies authorities will manage a controlled weakening of the currency as opposed to a wholesale devaluation.
Sources: Yahoo Finance, Oanda, Investing.com, Bloomberg.
