Forex Today: Tariff talks under scrutiny following volatile opening to week
Here is what you need to know on Tuesday, April 8:
In the absence of high-tier macroeconomic data releases, market participants continue to assess the latest developments surrounding the global trade conflict that was triggered by US President Donald Trump's tariffs. The NFIB Business Optimism Index for March will be the only noteworthy data release featured in the US economic calendar on Tuesday.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.33% | -0.28% | -0.43% | -0.51% | -1.25% | -1.24% | -0.24% | |
| EUR | 0.33% | 0.01% | -0.11% | -0.19% | -0.90% | -0.86% | 0.09% | |
| GBP | 0.28% | -0.01% | -0.15% | -0.17% | -0.93% | -0.88% | 0.14% | |
| JPY | 0.43% | 0.11% | 0.15% | -0.08% | -0.80% | -0.83% | 0.24% | |
| CAD | 0.51% | 0.19% | 0.17% | 0.08% | -0.75% | -0.71% | 0.33% | |
| AUD | 1.25% | 0.90% | 0.93% | 0.80% | 0.75% | 0.04% | 1.08% | |
| NZD | 1.24% | 0.86% | 0.88% | 0.83% | 0.71% | -0.04% | 1.03% | |
| CHF | 0.24% | -0.09% | -0.14% | -0.24% | -0.33% | -1.08% | -1.03% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Markets turned risk-averse at the beginning of the week as Trump and other US officials reiterated their willingness to keep tariffs in place. In an interview with Fox News on Monday, Kevin Hassett, Director of the US National Economic Council (NEC), said that Trump is doubling down on something he knows works and added that Trump will listen to trading partners if they offer "really great deals." Later in the day, several news outlets, including Reuters, reported that Hassett told CNBC that Trump is considering a 90-day pause in tariffs for all countries except China. The positive impact of this headline on the risk mood remained short-lived, however, as the White House came out with a statement, calling the CNBC reporting "fake news."
In the meantime, Trump took to social media to threaten an additional 50% tariffs on China, after China issued retaliatory tariffs of 34% on US goods on Friday. In response, "if the US insists on a trade war, China will fight until the end," China's Foreign Ministry said on Tuesday.
Despite this back and forth between China and the US, US stock index futures trade decisively higher in the European morning on Tuesday, pointing to an improving risk mood, while the US Dollar (USD) Index stays in negative territory at around 103.00.
After closing the day virtually unchanged on Monday, EUR/USD clings to daily gains at around 1.0950 in the early European session. European Union trade commissioner Maros Sefcovic said on Monday that they have offered zero-for-zero tariffs to the US for cars and all industrial goods.
GBP/USD lost more than 1% on Monday and touched its weakest level in a month near 1.2720. The pair corrects higher on Tuesday and trades slightly above 1.2750.
NZD/USD lost more than 3% last Friday and continued to push lower on Monday. After dropping to its weakest level in about five years near 0.5500, the pair reversed its direction and was last seen trading at around 0.5600, where it was up 1.2% on the day. The Reserve Bank of New Zealand will announce monetary policy decisions in the early trading hours of the Asian session on Wednesday.
USD/JPY rose more than 0.5% on Monday but failed to preserve its bullish momentum. At the time of press, the pair was down 0.5% on the day at 147.10. Japanese Prime Minister (PM) Shigeru Ishiba said on Monday they will continue to push the US to review the tariff policies and noted that he is considering visiting the US at the appropriate time to have a direct talk with Trump.
Gold extended its slide on Monday and lost more than 1.5% on the day. XAU/USD stages a rebound in the European morning on Tuesday and trades slightly above $3,000.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
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