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After a day of significant climbs on the pound and dollar, as the markets prepared for global tariffs to come into effect, the euro only ended marginally ahead on both currencies.
The markets swung back and forth throughout Tuesday as story after story hit the headlines. Ontario Premier Doug Ford implemented a 25% surcharge on electricity sent over the border to New York, Michigan, and Minnesota. Trump then retaliated, announcing an additional 25% tariff on steel and aluminium, bringing the total levies to 50% on Canadian metal imports.
This dramatic tit-for-tat sent both countries’ currencies down and led to further stock sell offs in Wall Street, prompting conversations between Ford and the US government. Shortly after, both Canada and the US announced they would be rescinding their additional levies.
However, this will they, won’t they approach to trade tariffs is only leaving the markets more unsettled. Despite late in the day climbs for USD, CAD, and the stock markets, the S&P 500, Dow Jones, and Nasdaq all closed down at the end of trading on Tuesday.
The US will release inflation data this afternoon, and any indication of a Trumpcession may freshly scare the markets.
The trade war stories will continue with global US tariffs on steel and aluminium coming into effect today. While Prime Minister Keir Starmer has said the UK won’t retaliate, the European Commission has promised €26bn of counter tariffs on US goods.
UK Steel warns the tariffs will be “hugely damaging”, as US trade accounts for nearly 10% of the country’s exports and more global suppliers will be looking to sell into the UK to avoid US tariffs.
With no major data releases planned for the EU or UK today, two big stories are likely to lead the markets. The global tariffs and the news of a potential ceasefire in the Russian/Ukrainian conflict.
Late on Tuesday, Ukraine agreed to a 30-day ceasefire and now all eyes are on Russia to see if it will halt its operations, too. It would be the first break in hostilities since Russia invaded Ukraine three years ago and could be the first steps to a longer lasting peace deal. Markets anticipate a peace would bring loosened economic sanctions on Russia and restorations of trade.
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GBP: Absorbing tariffs
After ending Tuesday firmly ahead of the dollar, the pound has started to lose its recent gains as global US tariffs come into effect. Trump’s on-again, off-again style means there is great volatility in the market.
GBP/USD past year
EUR: Takes a big hit, retaliation planned
The euro spent most of Tuesday far ahead of the pound and dollar, but those gains were eroded the clock on US tariffs ran out. Ursula von der Leyen has come out swinging, however, announcing €26bn in retaliatory levies.
EUR/USD past year
USD: A day of ups and downs
The dollar ended Tuesday just behind the pound and euro as the markets were left reeling by Trump’s uncommitted and capricious approach to tariffs. USD lost ground in the morning and regained it in the evening as he flip flopped on his plans.
USD/GBP past year
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