European FX Open - Wires watching, as China retaliates

USD//CAD gives back further ground after spiking to 1.4793 multi-month highs Monday.

Similarly, USD/CNH peaked yesterday at 7.3734 and has moved back towards the psychological 7.3000 mark.

The moves coincide with latest developments in Trump's tariffs war.

Bbg reports Trump said his admin plans to speak with China, raising the possibility of a potential reprieve on a 10% tariff set to take effect in hours after he delayed levies on Canada and Mexico. The US president agreed to delay 25% tariffs on Canada and Mexico for a month after both US neighbors agreed to take tougher measures to combat migration and drug trafficking at the border, warding off a continental trade war for now.

However, BBC News reports China has announced retaliatory tariffs on some American goods, as US tariffs on all Chinese goods come into force. The Chinese tariffs, due to begin (immediately) would put a 15% import tax on US coal and liquefied natural gas, plus 10% on crude oil, agricultural machinery, pick-up trucks, and some sports cars, while Beijing also announces an anti-monopoly investigation into Google. The US company operates there, but its search engine has been blocked since 2010.

Tariffs fallout and wires watching looks again to be main theme today.

US data the leader today via JOLTS job openings (8000k seen in December vs 8098k last), factory orders.

On the central bank front, Riksbank Minutes from its latest MPM and -25BPs rate cut are due this morning; ECB's Villeroy is a scheduled speaker for the second half and Fed's Bostic is due around Close.

Fed's Daly speaks tonight too and ahead Goolsbee suggested policymakers should proceed more cautiously in lowering rates with mounting uncertainty introduced by Trump and Bostic wants to wait “a while” before easing again.

Elsewhere, US stock futures are all light in the red, around -0.2% at the time of writing, as Morgan Stanley warned tariff-related risks may sink Asian tech stocks by 20%; Paul Tudor Jones said the macro environment is “precariously perched” under Trump. Last night, Trump also signed an executive order to start the process of establishing a US sovereign wealth fund.

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