April 10, 2025
- Trump blinks, markets rally
- US March CPI ex-food and energy falls more than expected.
- US dollar drops sharply-JPY underperforms.
FX at a Glance
USDCAD: open 1.4072, overnight range 1.4050-1.4111, close 1.4084
USDCAD plunged from 1.4275 yesterday to 1.4050 overnight following a massive unwind of “Sell America” trades. Trump got spooked by massive bond and equity losses, which fueled recession worries and eroded confidence in his MAGA strategy. He paused the global tariffs for 90 days just hours after they came into effect and lowered the reciprocal tariff to 10%.
The sharp USDCAD sell-off was all because of widespread US dollar selling pressure against the majors, but it is not warranted. Nothing changed for Canada. The steel, aluminum, lumber, oil, and potash tariffs are still in place. And Canada has not rescinded its 25% tariff on US auto imports. Eventually, Trump will notice.
US inflation fell from 2.8% in February to 2.4% y/y in March which was lower than the 2.6% forecast. Core CPI fell to 2.8% y/y from 3.1% in February. It is good news for those wanting the Fed to cut rates but the murky outlook from Trump’s trade war with China and the rest of the world will keep the Fed is entrenched in “wait and see” mode.
WTI oil traded erratically. Prices hit 55.23 yesterday and 63.34 overnight before retreating to 60.90 in NY trading.
USDCAD Technicals
The intraday USDCAD technicals are bearish while prices are trading below 1.4205 and looking for a break below 1.4030 to extend losses to 1.3960. A decisive break above 1.4240 would negate the downside pressure.
Longer term, the widening Bollinger Bands suggest increased volatility, and a drop to the 1.3930 area would suggest prices are oversold and vulnerable to a rebound to the 1.4270 zone.
For today, USDCAD support is 1.4040 and 1.4000. Resistance is at 1.4110 and 1.4150.
Today’s Range: 1.4040–1.4140
Chart: USDCAD 1 day
Yippy Yippy Hurray
On Monday, Trump extolled Americans to not be “Panicans,” another word unique to his dictionary. Well, the Panicans didn’t listen and after wiping out $10 trillion in stock market value, Trump bowed to Panican Power. Just thirteen hours after launching a tariff barrage on the world, he didn’t just blink—he buried his head in the sand and hit pause on all reciprocal tariffs for 90 days.
Then came the army of sycophants, led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnik, and Miss Piggy look-alike Press Secretary Karoline Leavitt, and—quoting from a script George R.R. Martin would envy—fanned out to claim that everything had gone exactly according to Trump’s master plan. Leavitt insisted that critics simply didn’t grasp the Art of the Deal and had failed to recognize Trump’s strategic genius.
It was enough for Goldman Sachs to rescind its recession call, while Citibank is suggesting buying large-cap stocks.
Stock Markets Roar Back
Wall Street liked Trump’s about-face and powered the biggest rally in stocks since 2020. The NASDAQ gained the most since October 2008. Even so, the NASDAQ is still down 11.74% in April, and the S&P 500 has lost 2.7%.
Asian equity indexes soared. Tariff relief fueled an 8.09% rally in Japan’s Topix and a 4.54% jump in Australia’s ASX 200.
European bourses are feeling the love. The German DAX and French CAC 40 index have risen over 5.0%, while the UK FTSE 100 is up 4.09%. S&P 500 futures sank but have recouped some losses and are down 1.59%. The 10-year Treasury yield retreated from 4.338% to 4.29%. However, gold (XAUUSD) is clinging to recent gains and sits at 3121.28, just below its recent 3168 peak. The CBOE fear and greed index has receded from 55 yesterday but remains elevated.
EURUSD
NY Open: 1.1065 Overnight Range: 1.0943–1.1065
EURUSD extended its overnight gains and touched 1.1132 in NY, post CPI. Prices are also hanging on to its recent gains due to investors souring on the US dollar after Trump’s actions. The evidence of the distaste for the dollar can be seen in both CHF, JPY, and gold remaining robust. News that German politicians have reached a coalition deal between Friedrich Merz’s Conservatives and the Social Democrats (SPD). The EURUSD technicals are bullish above 1.0880. Analysts are hoping that the 90-day tariff delay will allow negotiators to reach a deal.
GBPUSD
NY Open: 1.2889 Overnight Range: 1.2810–1.2894
NY Open: 1.2889 Overnight Range: 1.2810–1.2894
GBPUSD blew the top of its overnight range and hit 1.2957 after the weaker than expected US inflation numbers. Trump’s tariff pause was no big deal for the UK as they only faced a 10% tariff, and so nothing has changed. The short-term GBPUSD technicals are bullish above 1.2760.
USDJPY
NY Open: 145.96 Overnight Range: 145.96–147.92
USDJPY is giving back yesterday’s gains and has a bearish bias while prices are below 147.00, thanks to Trump’s tariff reprieve. Prices continued to slide in NY after the US CPI data. The odds for the BoJ to hike rates by 25bps by year-end are about 50%. Japan’s March PPI rose 0.4% (forecast and previous 0.2%), while the year-over-year number ticked up to 4.2% from 4.1%.
AUDUSD
NY Open: 0.6167 Overnight Range: 0.6117–0.6204
AUDUSD rallied on the back of broad US dollar weakness, but prices are still below last Friday’s level. The lag in gains is because of Australia’s trade relationship with China and the increased risk of a sharp economic slowdown there after Trump hiked tariffs to 125%. Australian inflation expectations rose to 4.2% from 3.6% in February, but only 2.4% y/y.
NZDUSD
NY Open: 0.5551 Overnight Range: 0.5486–0.5565
NZDUSD joined the rally party, but the 125% tariff slapped on China by Trump tempered enthusiasm.
USDMXN
NY Open: 20.3785 Overnight Range: 20.1847–20.4443
USDMXN is on the defensive due to improved risk sentiment after Trump blinked and paused tariffs. He still left the minimum 10% levy in place, but the news erased all of this week’s gains. Banxico is expected to announce a 50 bps rate cut to 9.00%.
FX high, low, open (as of 6:00 am ET)
China Snapshot`
PBoC fix: 7.2092 vs exp. 7.3484 (Prev. 7.2066).
Shanghai Shenzhen 300 rises 1.31% to 3735.11
CPI year /year -0.1% vs forecast 0.1% and previous -0.7%.
Trump hits China with 125% tariff in response to China daring to defy him .
Chinese authorities expected to launch another stimulus package to help alleviate impact of Trump tariffs.
: Yahoo Finance, Oanda, Investing.com, Bloomberg.
