March 27, 2025
- Trump hits autos with tariffs in an act of deflection
- Today’s US GDP data is stale-Tariffs will drive it lower
- US dollar opens due to increased risk aversion.
FX at a Glance
USDCAD: open 1.4286, overnight range 1.4260-1.4316, close 1.4265
USDCAD traded with only a slight bullish bias overnight, almost as if traders were flipping Trump the bird. The currency barely budged after Trump announced tariffs on autos. That’s partly because they only impact cars made outside of America and didn’t provide much in the way of details.
What makes it worse for Canada is that the country doesn’t have a government focused on the tariff issue. The incumbent Liberals are busy campaigning, and the only leader who has been able to establish a dialogue with the Americans is Ontario Premier Doug Ford. However, he only has limited options to counteract the US tariffs.
The auto tariff issue will sideline traders until there is more clarity on the issue, while the leaked Signal chat about bombing Yemen provides the entertainment.
WTI oil traded defensively and fell from 69.87 to 69.23 before rebounding to 69.51 in NY. News that the EIA reported a 3.3-million-barrel decline in US inventories last week, combined with caution about reduced demand from tariffs, more than offset the risk of reduced supply from Venezuelan tariffs.
US Q4 GDP rose 2.3%, (forecast 2.4%), PCE unchanged at 2.4% and initial jobless are 224,000 (forecast 225,00).The data is being ignored.
USDCAD Technicals
The intraday USDCAD technicals are bullish above 1.4260 and looking for a move above 1.4340 to extend gains to 1.4380. A move below 1.4260 targets 1.4240, then 1.4210.
The medium-term outlook is still bullish with a move above 1.4360 suggesting further gains to 1.4460 then 1.4550. The uptrend line remains intact above the 1.4240 area.
For today, USDCAD support is 1.4270 and 1.4240. Resistance is at 1.4320 and 1.4360.
Today’s Range: 1.4260-1.4360
Chart: USDCAD 1 day
Deny, Deny and Deflect
Donald Trump’s Cabinet picks make him look like a moron. He thought it was okay when he promoted a junior officer to Secretary of Defence. It wasn’t. The fall-out from that bonehead decision is reverberating through auto markets. Auto markets?
Its called deflection and the go-to tactic of damage control PR agents—Deny, deny, and deflect.
Autos are the deflection. Trump and his cronies are hoping that attacking American autoworkers will be an effective strategy to shift the media’s focus from the clown show that is his inner circle to the tariff agenda. Trump is not concerned with the over 4 million auto and ancillary workers that may lose their job. Nope, not his problem. He is making America great again.
Equity Traders Bail
Trumps plan to Make America Great is also making investors poorer. Trumps tariffs helped fuel another sell-off on Wall Street with the S&P 500 losing 1.12%. Asian markets faired better—at least the Chinese ones. Australia’s ASX 200 lost 0.37% and Japan’s Topix was flat. European bourses are in the red. The German Dax is down 0.60% and the UK FTSE 100 has lost 0.56%. S&P 500 futures are flat while safe-haven gold (XAUUSD) gained 35.00.
EURUSD
NY Open: 1.0772 Overnight Range: 1.0733-1.0787
EURUSD is trading sideways, albeit a tad softer from yesterday as traders turn their attention to the rising risk of a protracted global trade war. Norway’s Norges Bank left rates unchanged at 4.5% as expected but hinted at lower rates in the future. Traders are waiting for EU retaliation with the German Economic Minister demanding a “decisive response.” For today, EURUSD traders are content to sit on the sidelines until they get some additional tariff details.
GBPUSD
NY Open: 1.2919 Overnight Range: 1.2871-1.2929
GBPUSD has recouped yesterday’s losses from the softer inflation data and is trading at the top of its overnight range. Trump’s tariffs and the fallout from Rachel Reeves budget are competing for attention. Many Brits are unhappy that Ms Reeves cut spending on Welfare to avoid raising taxes on the middle class.
USDJPY
NY Open: 150.93, Overnight Range: 150.06-150.98
USDJPY rallied steadily and is at the top of the overnight band. The move was sparked by Trump’s auto tariff announcement and policymakers are waiting for more details. Prime Minister Shigeru Ishiba said all options were on the table but he sounded like he is hoping for special treatment from Trump. He said “We have made investments in the United States, created jobs and paid the highest wages. Japan’s investment in the U.S. is among the highest — in fact, it ranks first.” Good luck.
AUDUSD
NY Open: 0.6308 Overnight Range: 0.6279-0.6319
AUDUSD traded quietly and appeared to shrug off rising negative risk sentiment. Australia was not impacted by Trumps auto tariffs because they do not have an auto industry. The RBA is expected to leave rates unchanged at next week’s meeting which is providing the currency with a bit of support.
NZDUSD
NY Open: 0.5740, Overnight Range: 0.5712-0.5752
NZDUSD trading quietly overnight supported by some analysts predicting that the New Zealand economy is somewhat sheltered from Trump’s tariffs. Prices are underpinned by hopes of new Chinese stimulus.
USDMXN
NY Open: 20.1630, Overnight Range: 20.1046-20.2707
USDMXN spiked on the news of Trump’s auto tariffs but has drifted lower since. Traders have turned their attention to today’s Banxico monetary policy meeting and expect a 50 bps rate cut to be announced.
FX high, low, open (as of 6:00 am ET)
China Snapshot`
PBoC fix: 7.1763 vs exp. 7.2728 (Prev. 7.1754).
Shanghai Shenzhen CSI 300 rose 0.32% to 3932.41
China rejected Trump’s offer to reduce tariffs to get a TikTok deal done. That sounds more like a Soprano’s plot than state-to-state negotiations.
Sources: Yahoo Finance, Oanda, Investing.com,
