Are you ready for ‘Liberation Day’? Is anyone?

Trump has named today ‘Liberation Day’ and will this evening announce a raft of tariffs, to be imposed immediately, on various US imports. The extent of these tariffs seems to be between 10% and 25%, but speculation is rife and the news-flow is as unclear as ever.

The after-effects upon global trade and possible retaliatory actions will play out in the near and medium term and continue to bring heightened volatility and nervousness across financial markets.

Commerzbank economists state: “If consumers stop spending because of fear of unemployment and rising prices, shy away from major purchases or even tighten their belts and go without, the great pillar of US growth will falter.”

EUR/USD has climbed from 1.0150 in January, has pulled back from last week’s 1.0950 level and hovers around 1.0800. ING is suggesting that the 1.0800 level has NOT priced in enough ‘tariff-risk’ and a EUR sell-off is likely. This makes the ECB rate announcement in 2 weeks time very important to FX markets.

GBP/USD has climbed from 1.2150 in January and today sits at 1.2900, having had some huge one-day moves on the way.

GBP/EUR remains elevated as both currencies are struggling to find individual support. Currently at 1.1950

AUD has had a very strong week after rates were kept on hold, the central bank did not discuss rate - cuts and is benefitting from a more optimistic view on China.

Data:
Thursday 3rd
AUD After keeping rates on hold on Monday, we have Trade Balance data
US Services data
EU Producer price data influencing inflation and rates

Friday 21st
US Employment and productivity data
US Fed Chair Powell will speak
CAD Employment data