“Liberation Day” Plus One was not a happy day for anyone with dollars to sell, as USD sank by close to 2% against the euro and yen, and even more against the Swiss franc.
The dollar is at its lowest against the pound and euro since October, with USD/EUR having lost around 7% in two months.
Former New York mayor and Trump stalwart Rudi Giuliani rang the opening bell on the New York Stock Exchange yesterday, starting a day of the biggest losses on Wall Street since the pandemic struck five years ago.
However, Trump could point to some immediate positive effects, as UK digger manufacturer JCB announced plans to double the size of its new factory in Texas, investing $500million. JCB are unlikely to be the only manufacturer looking to escape tariffs in such a way.
But what of sterling? The UK getting away relatively lightly on tariffs was little help for the pound, which lost almost across the board. GBP/EUR lost well over 1%.
The euro’s strength was a result of capital outflows from the US to Europe. Almost all currencies are gaining against the dollar but the euro is gaining more than most. However, the markets may also be betting on the tariffs on Europe being watered down if it can cut its current $235bn trade surplus.
Tariffs were not the only game in town yesterday. The final result for March’s Purchasing Managers’ Index (PMI), a highly influential gauge of business optimism, found a surge in confidence from business leaders in UK services and manufacturing. This was echoed throughout most eurozone countries too.
This afternoon we will hear the latest on the US jobs market, with Non-Farm Payrolls, and a speech from US Federal Reserve Chair Jerome Powell, where he could outline the Fed’s response if tariffs cause US inflation to spike.
So there is plenty of potential life left in the currency markets today.
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