This wildly volatile trading week continued through yesterday and overnight, and the United States Dollar after sliding further in trading on Thursday managed to catch a bid during the Asian and European sessions
Overview
clawing back some of the week’s very heavy losses. The Bloomberg Dollar Spot Index is at the time of writing sitting roughly half a percent above yesterday afternoon’s dismal closing level, driven both by US jobs figures and continuing headlines on trade tensions.
China announced overnight that it would match the US’ imposition of tariffs and enact a twin 34% levy on all US goods imported to China. This immediately caused a swing positive for the Dollar against most majors as investors began to look more critically at the global economic impacts of what can now be called a trade war rather than focusing on the likely negative impacts on the US economic picture alone. Those US-specific negatives without a doubt do remain, but this matching imposition from China runs another large risk for the global picture. Emerging markets took a beating on the news, with Mexican Peso and Brazil Real leading losses in early US trading hours. US equities are set to continue their freefall this morning – Dow futures are down a further 2.3% pre-market on the news of this retaliation, while haven assets continue to gain.
The Dollar bid this morning was also helped by a surprisingly positive jobs release, showing the US economy added 228,000 jobs last month. This is well above expectations of a gain of 140,000. February’s figures, however, were revised downward in a fairly substantial way and unemployment rose as well, showing that even though the headline number may be positive there are still cracks in the employment picture. This number, of course, doesn’t take into account any of this week’s events and the inevitable fallout from a global trade war, but could potentially preclude any support for flailing equities from either President Trump or Fed Chair Jerome Powell, the latter of whom will speak on the state of the economy at 11 this morning.
What to Watch This Week…
- Fed Chair Jerome Powell Speech, Friday 11AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
AUD ⇓
The Australian Dollar is in freefall this morning, facing down a slide of nearly 3.5% against USD which marks its biggest intraday loss since 2008. China’s retaliatory tariffs are having an outsized impact on the Antipodean currencies compared with the rest of the world, as both Australia and New Zealand trade primarily with China but still do have strong US ties. Long positions in both AUD and NZD have been all but liquidated, paving the way for increasingly volatile trading on both the AUDUSD and NZDUSD pairs. Australia’s employment picture, as well, continues to be fragile and the nation appears caught between a rock and a hard place.
CAD ⇓
The Loonie is facing down heavy losses against USD this morning, though still trading very much net positive on the week versus the Buck. Canada also released employment figures this morning, showing that the Canadian economy shed 32,000 jobs, its biggest drop since 2022. The Canadian economy was expected to add 10,000 jobs, but facing an outright contraction makes the employment backdrop for our neighbors to the north look even more dismal than the lackluster figures seen the last few months. USMCA exemptions to Trump’s new tariffs, though, are expected to stay in effect, keeping Canada slightly insulated from the worst of the trade war’s effects.
