European FX Open - AUD/USD trades below 0.6000 for the first time in around five years

Some semblance of normality in FX markets returns.

USD/YEN opens the week a little firmer, back towards 146.00, while EUR/USD is little changed just shy of the psychological 1.1000 mark.

Perceived growth and risk led, high beta FX though continues to be pressured, with AUD/USD losing its 0.6000-plus status since Friday's close for the first time in around five years.

However, the Nikkei has lost around -7% and all US stock futures are deep in the red at the time of writing, led by the -4.7% NASDAQ, as US President Trump and his economic team dismissed investors’ fears of inflation and recession, offering no apologies for the market turmoil sparked by sweeping global tariffs and defiantly insisting a boom is on the horizon, writes Bbg.

Trump insists the US will become "wealthy like never before" and that he won't strike deals to cut the highest tariffs unless they eliminate the US trade deficit with that country, while his top economic officials argued that market turmoil is temporary, with some predicting a boom in the near future.

However, BBC News reports that Bill Ackman, one of Trump's most prominent Wall Street backers, says the tariffs could lead the world into a "economic nuclear winter" as he calls for a 90-day pause on the taxes.

In response to Trump's tariffs implementation, Japan PM Shigeru Ishiba said he would go to the US as soon as possible to pitch a wide-ranging deal to Trump, while China said it has room to ease borrowing costs and reserve rules for lenders if needed to defend its economy against Trump's tariffs. Bbg writes China’s government bonds surged, pushing the benchmark yield close to the lowest on record, as investors rushed for haven assets amid monetary easing bets.

Today (and this week, the quarter?), tariffs will stay front and centre, with traders and investors keeping an eye fixed on potential fresh red headlines, while for the broader USD it feels like stocks and yields watch will continue for some time.

On the slate, we get the likes of Norway and German IP at the very top of the hour followed by the likes of Swiss FX reserves and Eurozone Sentix investor confidence and retail sales this morning.

In the second half, the BOC's Q1 business outlook has the floor.

Overnight, Japan labour cash earnings (nominal wages) came in a firmer than forecast 3.1% y/y vs 2.8% last. Wages are expected to keep rising through much of 2025, supported by strong outcomes in the latest round of annual labor talks, but BOJ tightening speculation has slowed in the last week as tariffs related uncertainty moves to the fore.

Also on the central bank front, the ECB's Cipollone and Fed's Kugler are scheduled speakers during the session.

Elsewhere, oil fell to four year plus lows of Usd 63.01/brl, as Saudi Arabia cut its flagship crude price by the most in more than two years, and the escalating trade war spurred concerns about a global recession and weaker demand. Bbg reports state producer Saudi Aramco will lower Arab Light crude to its biggest buyers in Asia by Usd 2.30/brl for May. Oil losses have of course exacerbated by the surprise move by the OPEC+ alliance to increase production, reviving concerns about a global surplus.

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