Markets Rattle as US Slaps 104% Tariffs on China

09.04.2025

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

US Dollar 1.4090-1.4300

Euro 1.5560-1.5790

Sterling 1.8020-1.8250

WTI Oil (opening level) $55.74

The CAD/USD is opening at 1.4201 (0.7041)

Friday opens with the CAD on weaker footing as political drama and tariff escalation dominate sentiment. The USD/CAD remains above the 100-day moving average, suggesting underlying resilience despite volatile backdrops. Markets are still trading within normal ranges, but the growing friction in global trade and mixed US macro signals are creating a distorted picture for the currency pair.

Technically, the pair remains in a precarious zone. While the 1.4150 support held firm earlier this week after a false breakdown, the path higher is cluttered with resistance near the 50-day EMA around 1.4300. A breach above April 3’s high of 1.4320 could accelerate momentum toward 1.4415, while downside risks re-emerge if the pair slips below 1.4020.

Headlines

Trump’s 104% tariffs on Chinese imports begin today, sending shockwaves through global markets. Beijing has pledged to retaliate, with rhetoric growing sharper and more defiant. Economists at JPMorgan and Goldman Sachs now assign higher odds to a US recession as fears deepen.
The EU remains firm but cautious, awaiting substantive US engagement before rolling out its response to the new tariffs. A detailed counter-proposal is expected early next week.
Canada’s Ivey PMI cooled to 51.3 in March, falling short of forecasts but staying above the 50 expansion mark. Inventory growth offered some support, but momentum is clearly softening.
China's renminbi was fixed at 7.20, its weakest level since 2023, reinforcing speculation that Beijing could devalue the yuan further to soften the impact of US tariffs.
Japan is reportedly receiving priority in new trade talks after Trump’s tariffs hit Japanese goods with a 24% rate. Currency levels are said to be on the table.

Key Points

Equities: Tariffs now in effect; US healthcare stocks resist broader declines; European bourses brace for retaliation; Asia stabilizing
Volatility: VIX holding above 52; VVIX surges as hedging intensifies; markets unsettled
Digital Assets: BTC and ETH retreat under pressure; miners suffer; crypto outlook distorted by trade war headlines
Currencies: USDCNH breaks 7.375 for the first time since inception; JPY, CHF, and EUR climb against USD on safe haven flows
Fixed Income: Long-end US treasury yields surge; concerns about market stability mounting
Commodities: Gold rallies on risk aversion; crude sinks as recession fears dent fuel demand

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