European FX Open - Tariffs more aggressive than envisaged

The USD starts the day largely much softer across the board.

Chief winners are the other traditional havens of the YEN and CHF followed by other Europe FX members.

More risk, growth-led currencies such as the AUD and NZD are underperforming, as all US stock futures are deep in negative territory at the time of writing, led by the -3.2% NASDAQ!

Moves follow Trump's tariffs announcements.

BBC News reports US President Donald Trump announces universal 10% tariffs on all imports into the US will go into effect on April 5 in a watershed moment for global trade. China, perhaps the country that's been hit hardest with total levies up to 54%, has demanded that Trump revoke the tariffs and vowed countermeasures.

Trump says the UK will have a 10% tariff on goods, and the EU's rate will be 20%.

Trump also announced a 25% tariff on all foreign-made vehicles.

The moves were viewed as more aggressive than expected.

President of the EC Ursula Von der Leyen has vowed a unified response.

Japan’s Trade Minister said Washington's latest broadside on tariffs is extremely regrettable and pushed for an exemption, hours after the US announced new levies on Japan that were higher than expected.

And, Australia PM Albanese said the US announcement of a 10% tariff on Australian goods was a “poor decision,” adding he would not respond with reciprocal levies.

EUR/USD high is 1.0925 so far. Will the announcements prove a range breaker, with stops inevitably placed above the 2025 high of 1.0955?

Similarly, USD/YEN bears may have 146.54 range low and the psychological 145.00 mark in their sights, as the US 10-year yield slides towards its psychological 4.0% mark.

Overnight, the PBOC set its yuan reference exchange rate at 7.1889, stronger than expected, perhaps in order to prevent rapid RMB depreciation.

Tariffs, again, will stay front and centre. Will early Europeans push the USD further lower straight away?

Data wise, it's fairly busy with the releases through the morning of states final services and composite PMIs for March as well as the likes of Swiss CPI and out of the UK the DMP 1-year CPI expectations.

We suspect markets will really be monitoring US data ahead now for further signs of the end of its growth exceptionalism era. Today, we get trade (and from Canada too), pre-NFPs Challenger job cuts and initial claims as well as the likely biggest focus the ISM services index, also seen lower at 52.9 vs 53.5.

The ECB publishes its account of its March policy meeting which drew another -25BPs rate cut, while there is also scheduled central bank speak from the ECB, SNB and Riksbank as well as the Fed after hours.

Overnight, Fed’s Adriana Kugler said it’s appropriate to keep rates unchanged until inflation risks abate. And, ECB's Villeroy said a further slowdown in inflation can give the Bank greater confidence to cut rates again “soon.”

Elsewhere, Bbg reports Senate Republicans unveiled a budget blueprint to fast-track a renewal of Trump’s tax cuts and raise the debt limit, allowing for Usd 5.5tln in total reductions. Treasury Secretary Bessent indicated that the US is at risk of running out of room to make good on all of its payment obligations on time as soon as May or June.

The FT reported the White House is close to endorsing a deal for US investors to buy TikTok’s American operations.

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