April 14, 2025
- China electronics tariffs paused-but not paused
- Tariff news will continue to Trump data.
- US dollar under pressure on improved risk sentiment.
FX at a Glance
USDCAD: open 1.3848, overnight range 1.3829-1.3885 close 1.3865
USDCAD extended last week’s losses on improved global risk sentiment after Trump appeared to flip-flop on Chinese electronic export tariffs. The news fueled a global equity rally and the US dollar sank across the board.
The Bank of Canada is expected to deliver a 25 bp rate cut at Wednesday’s meeting, but some economists are not so confident. They think Governor Tiff Macklem may want to keep his powder dry in the face of trade war uncertainty and the Canadian election. Canada inflation data is on tap on Tuesday.
WTI oil rallied from 61.10 to 62.66 and has gained 13.6% since the 55.31 low seen on April 9. The gains are due to broad US dollar weakness and news that Chinese crude imports reached a 20-month peak on increased flows from Russia and Iran.
The US and Canadian economic calendars are empty.
USDCAD Technicals
The intraday USDCAD technicals are bearish and in a downtrend channel while trading below 1.3890 and are looking for a break below 1.3830. However, momentum indicators are at extreme oversold levels, suggesting a move above 1.3890 will extend gains to 1.3950.
Longer term, the break below the 200-day moving average at 1.4000 and the 1.3950 level (61.8% Fibonacci retracement of the September–February range) sets the stage for a deeper drop to 1.2770, the 76.6% retracement level. A sustained break above 1.4000 is needed to negate the downside risk.
For today, USDCAD support is at 1.3830 and 1.3770. Resistance is at 1.3890 and 1.3940.
Today’s Range: 1.3810-1.4010.
Chart: USDCAD 1 day
Embarrassed Trump Changes His Tune Again
Late Friday, Trump announced a sort of reprieve to the 145% tariffs imposed on China after tech companies and consumers howled about massive price increases. Almost immediately, Donald Trump became a “punch-line” and his administration was mocked incessantly for looking confused and incompetent. Donnie didn’t like that and late Sunday he took to TruthSocial to yell, “NOBODY is getting ‘off the hook’ for the unfair Trade Balances, and Non-Monetary Tariff Barriers, that other Countries have used against us, especially not China which, by far, treats us the worst!” Then he went on to blame the “Fake News” for not reporting that the 20% fentanyl tariff remained and for not knowing he had just decided that the tariffs were moving to a “different bucket.”
Equity traders buy it hook, line and sinker
Global equity traders either believed markets had found a bottom or they just needed an excuse to book some profits. Global indexes rallied hard to start the week. Australia’s ASX 200 climbed 1.34% while Japan’s Topix rose 0.86%. Even the Hong Kong Hang Seng index rallied, gaining 2.40%.
European traders view Trump’s tariff retreat as a positive and the major bourses rose, led by a 2.21% jump in the German Dax, and a 2.03% gain in the French CAC 40. The UK FTSE 100 joined the party and rose 1.68%. S&P 500 futures are up 1.44% while gold (XAUUSD) consolidated last week’s gain in a 3310.71–3245.76 band. The CBOE Vix index dropped 11.8% to 33.12
Trump took credit for getting the bond market to calm down, saying “bonds are going good. They had a little moment, but I solved that.” He said the US 10-year Treasury yield sits at 4.45%.
EURUSD
NY Open: 1.1368 Overnight Range: 1.1318–1.1407
EURUSD is on a tear and broke above its overnight peak to reach 1.1425 in early New York trading. The single currency is benefitting as it is the major recipient of US dollar flows as investors embrace the “sell America” theme. The break above 1.1270 snapped a three-year peak and has set the stage for further gains to the 1.1500 area. Traders are looking ahead to Thursday’s ECB meeting when a 25 bp rate cut is expected.
GBPUSD
NY Open: 1.3113 Overnight Range: 1.3064–1.3201
GBPUSD retreated from the top of its range but remains underpinned by widespread US dollar selling pressure. The currency pair continues to benefit from the UK’s somewhat gentle treatment by Tariff Man. Traders are looking ahead to UK employment data on Tuesday and inflation data on Wednesday.
USDJPY
NY Open: 143.09, Overnight Range: 142.23–144.07
USDJPY consolidated last week’s losses and found the bottom early in Asia. The slightly improved risk tone, which spurred a global equity rally, helped to limit the downside as did the relatively firm US 10-year Treasury yield. February industrial production rose 2.3% (forecast and previous 2.5%).
AUDUSD
NY Open: 0.6324, Overnight Range: 0.6279–0.6343
AUDUSD climbed on news of Trump’s tariff retreat on Chinese electronics. Direction continues to be dictated by broad US dollar sentiment. The minutes from the RBA meeting on April 1 are released tomorrow.
NZDUSD
NY Open: 0.5872 Overnight Range: 0.5818–0.5892
NZDUSD rallied on the back of improved risk sentiment and reached a four-month peak after Trump back-pedalled on tariffs for Chinese electronic exports. New Zealand’s Performance of Services Index ticked up, but BNZ Senior Economist Doug Steel said that “combining together the PSI and the Performance of Manufacturing Index (PMI), the Composite Index (PCI) suggests a modest economic recovery.”
USDMXN
NY Open: 20.1889, Overnight Range: 20.1425–20.3150
The Mexican economy is already in a recession, and Banxico reiterated its warning that downside risks remain in place. JPMorgan analysts are forecasting 50 bp rate cuts at each of the next three meetings, reaching 7.0% in Q4. USDMXN is consolidating recent moves, but while prices are above 20.0000, the focus remains on 20.7000.
The short-term USDMXN technicals are neutral. Although the uptrend remains intact above the 200-day moving average at 19.8630, the failure to extend topside breakouts risks a retest of the 19.8500 area.
Chart: USDMXN 4 hour
FX high, low, open (as of 6:00 am ET)
China Snapshot`
PBoC fix: 7.2110 vs exp. 7.3251 (Prev. 7.2087).
Shanghai Shenzhen 300 rose 0.23% to 3759.14
Chinese March Trade Balance $102.64B vs. Exp. $77.0B February $170.52B), Exports 12.4% y/y forecast 4.4% and February 2.3%. Imports 4.3% (forecast -2.0%, previous -8.4%).
Xi Jinping travelled to Vienma with plans to improve relations and strategic ties saying “Together with the vast majority of countries of the Global South, we will defend the common interests of developing countries.”
China halted exports of rare earth minerals and exporters need to apply to the Ministry of Commerce for licenses.
Sources: Yahoo Finance, Oanda, Investing.com, Bloomberg.
