Trump Tariffs Shake Markets: Inflation, Jobs, and USD/CAD in Focus

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

US Dollar        1.4080-1.4290

Euro                 1.5590-1.5820

Sterling            1.8370-1.8600

WTI Oil (opening level) $61.41

The CAD/USD is opening at 1.4194 ( 0.7045 )

Market experts believe that Trump’s tariffs will result in a resurgence in inflation and weigh on economic growth. However, Trump is confident that his protectionist policies will increase manufacturing jobs in the US.

Meanwhile, investors await the labour market data from both the USA and Canada, which will be published at 8:30.

The US and the Canadian economy are expected to have added 135K and 12K fresh workers in March. During the North American session, investors will also focus on Federal Reserve’s (Fed) Chair Jerome Powell’s speech for fresh guidance on the monetary policy outlook.

USD/CAD recovers from 1.4026, testing the breakdown of the horizontal support plotted from the February 17 low around 1.4160. The pair bounced back after attracting bids near the 200-day Exponential Moving Average, which is around 1.4070.

A fresh downside would appear if the pair breaks below the December 6 low of 1.4020. The scenario would expose the pair to the psychological support of 1.4000, followed by the November 25 low of 1.3927.

On the flip side, the pair would strengthen if it breaks above the April 3 high of 1.4320. Such a scenario would send the major higher to near the April 1 high of 1.4415 and the March 14 high of 1.4447.

Headlines

·    US ISM Services PMI fell to 50.8 in March 2025 from 53.5 in February, below the forecast of 53, marking the weakest expansion since last June. New orders, inventories, and supplier deliveries slowed, while employment contracted sharply to 46.2 from 53.9 in Feb. Backlogs of orders showed contraction again. Production rose and price pressures eased.

·    US Feb. Job Cuts rose 205% year-on-year in March as job cuts totalled 275,000, the highest number since the outbreak of the pandemic in 2020.

·    Continuing jobless claims in the US rose by 56,000 to 1,903,000 in the week ending March 22, the highest since November 2021, surpassing the forecast of 1,860,000, indicating challenges for unemployed individuals re-entering the workforce. Meanwhile, initial jobless claims fell by 6,000 to 219,000, below expectations of 225,000.

·    In February 2024, household spending in Japan decreased by 0.5% year-on-year, contrasting with a 0.8% rise in January and below estimate of –0.8%. This marked the first decline since November and was better than market expectations of a 1.7% decrease.

·    Canadian Liberal leader Mark Carney announced 25% tariffs on non-compliant US vehicle imports under the USMCA and vowed to contest US tariffs until removed. He affirmed existing retaliatory tariffs and promised a strong response to any new US tariffs, emphasizing the need to reset relations with the US 

Key Points

·    Equities: Trump tariffs hit stocks hard; $2.4T wiped; EU, Asia follow

·    Volatility: VIX hits 30; short-term vols spike; Powell in focus

·    Digital Assets: Bitcoin stable; XRP gains; crypto stocks plunge

·    Currencies: CHF and JPY are safe havens, USD stabilizing after initial shock move lower

·    Fixed Income: Global sovereign bond yields in heavy demand on collapse in risk sentiment as markets position for recession risks.

·    Commodities: Silver and copper slump lead biggest one-day loss since 2022