Muted Markets: Tariff Speculation Keeps Investors on Edge

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.4180-1.4400

Euro                 1.5350-1.5570

Sterling            1.8400-1.8610

WTI Oil (opening level) $69.57

The CAD/USD is opening at 1.4284 ( 0.7001 )

The markets have been muted for the last few days with nothing major moving anything. It feels like we are creeping along with minor changes here and there waiting for something. I think that something is the April 2nd tariff date from Trump. This is probably the calm before the storm.

Headlines

·    Trump imposed a 25% secondary tariff on countries buying Venezuelan oil or gas due to Maduro's lack of progress on reforms, while extending Chevron's deadline to exit Venezuela, easing pressure after a prior 30-day wind-down order. 

·    The S&P Global US Manufacturing PMI fell to 49.8 in March 2025 from 52.7 in February, below the expected 51.8, but the Services PMI came in much better at 54.3 vs 50.8 est. Output decreased after February's sharp rise, with fewer boosts from tariffs and nearly stalled new orders growth.

·    In March 2025, the HCOB Eurozone Manufacturing PMI rose to 48.7, the highest in 26 months, from 47.6, exceeding forecasts. Manufacturing expanded for the first time in two years. The Composite PMI increased to 50.4 from 50.2, below expectations. Manufacturing grew, service growth slowed, new orders declined, employment stabilised, inflation rates hit lows, and business confidence was at its lowest since November.

·    Fed’s Raphael Bostic said he now expects just one rate cut this year instead of two. He also told Bloomberg that it’s unclear whether tariffs will go beyond a one-time hit to prices.

Key Points

·    Equities: Stocks surge on tariff optimism; tech rallies; futures cautious ahead of data

·    Volatility: VIX falls; VVIX lowest since July; mild caution returns

·    Digital Assets: Bitcoin slightly lower; crypto stocks rally; Mt. Gox transfers watched closely

·    Currencies: Dollar shows broad strength

·    Fixed Income: Treasuries fall on reduced haven demand and corporate issuance

·    Commodities: Gold holds above USD 3000. Crude at 3-week high