Bitcoin Falls as Trump's Tariffs Hit Risk Appetite — Market Talk
0917 GMT - Bitcoin falls along with other cryptocurrencies as risk sentiment weakens after President Trump imposed trade tariffs on Canada, Mexico and China. "This announcement has spooked markets as it signals further disruptions to global trade and supply chains," Zaye Capital Markets analyst Naeem Aslam says in a note. Trump's threats to extend similar tariffs on the EU and potentially the U.K. have added to fears about escalating protectionist policies that could hinder global economic growth, he says. Bitcoin has been volatile amid recent geopolitical and economic developments. Investors should remain vigilant and consider these factors, he says. Bitcoin falls 6.6% to $95,529 after hitting a three-week low of $91,439 overnight, according to LSEG. ([email protected])0917 GMT - Sterling rises to a near four-week high against the euro and trades steady against a stronger dollar after President Trump appeared to take a softer line on the U.K. compared to the EU regarding potential tariffs. Trump on Sunday said new tariffs on the EU would "definitely happen" soon. He said the U.K. was also "out of line" but was sure a deal could be reached. Sterling is also helped by the fact that the U.K. runs a trade deficit with the U.S. and goods exports to gross domestic product are relatively small, ING analyst Chris Turner says in a note. EUR/GBP falls 1.2% to a low of 0.8311, according to FactSet. GBP/USD trades at 1.2312, having hit a two-week low of 1.2248. ([email protected])0916 GMT - There a is glimmer of hope that the United States' talks with Canada, Mexico and China can avert a trade war, says Susannah Streeter, head of money and markets at Hargreaves Lansdown. The U.S. tariffs have reignited inflation fears and President Trump has warned there could be some pain for Americans, she writes. If talks are not successful, and with the European Union set to be the next in line for tariffs, investors fear listed multinationals will be caught in the crossfires of escalating trade wars. ([email protected])0912 GMT - The Canadian dollar and Mexican peso drop to multiyear lows against the U.S. dollar after President Trump confirmed he would implement 25% tariffs on goods from Canada and Mexico, starting Tuesday. Both currencies remain sharply lower compared with levels on Friday, although they are off their weakest levels in early European trade. "In terms of implications, if implemented and prolonged, Canada and Mexico would likely go into an imminent recession and potentially see a bigger shock than Brexit was for the U.K.," Deutsche Bank analysts say in a note. The Canadian dollar hit its lowest level since 2003 overnight, taking USD/CAD to a peak of 1.4793, according to FactSet. USD/MXN hit its highest in three years at 21.2950, FactSet data show. USD/CAD is last at 1.4693, while USD/MXN is at 21.1535. ([email protected])0902 GMT - Fears of a global trade war has rattled investors in Europe after turbulence in the Asian markets, Hargreaves Lansdown's Susannah Streeter writes. The U.S. tariffs announced on Mexico, Canada and China show President Trump's threats weren't "bluff and bluster" but he isn't the only one playing hardball, the head of money and markets adds. Canada has already imposed 25% tariffs on $155 billion of U.S. imports while Mexico's president has also ordered retaliatory action, she says. With the European Union expected to be in line for punitive duties, it is clear that the Trump administration will sow global chaos and unpredictability in order to achieve domestic political wins, Streeter adds. ([email protected])0850 GMT - Positive sentiment towards eurozone bonds is holding after Trump went ahead with plans for tariffs on Canadian and Mexican goods and threatened a move against Europe, ING strategists say in a note. "Now that the pessimistic scenarios on trade appear to be unfolding, the bullish case for euro rates remains even more valid given the shock to risk sentiment." A recent rate cut by the European Central Bank, poor GDP numbers and an undershoot of eurozone inflation numbers have all helped yields down further, while further reductions in interest rates look likely, they say. The 10-year German Bund yield falls 2.5 basis points to 2.433%, according to Tradeweb. ([email protected])0848 GMT - The U.K.'sfragile fiscal position leaves it vulnerable to a global backdrop where rates are moving higher globally, Danske Bank analysts say in a note. Long-dated yields risk rising during times of heightened concern about fiscal sustainability--as they did earlier this year--although they should ultimately drop back, they say. Danske expects that the U.K. government will tighten the fiscal measures announced at the autumn budget, either by tweaking its growth plans, or by cutting spending or by raising taxes in its March 26 statement. Ten-year gilt yields trade 1 basis point higher at 4.536%. ([email protected])0826 GMT - China will likely respond to President Trump's move of imposing an additional 10% tariff on the country, says Commerzbank Research senior economist Tommy Wu in a note. However, there is a possibility that China will respond in a restrained manner and avoid setting off a tit-for-tat trade war with the U.S. for now, he writes. This comes at a time when China's leadership urgently needs to focus on its domestic economic problems, Wu adds. China said it would challenge Trump's move at the World Trade Organization and take other countermeasures, he notes, adding that China didn't specify what measures will be taken nor explicitly threaten retaliatory tariffs, Wu adds. "The official statement also left open the door for talks between Washington and Beijing," he says.([email protected])0818 GMT - President Trump's early strike on tariffs is likely to hit investor confidence, says Mansoor Mohi-uddin, Chief Economist at Bank of Singapore. The consensus had expected U.S. tariffs to only threaten the economic outlook in 2H, after lengthy negotiations between the U.S. and its main trading partners, he says. There could be several implications from the sudden return of trade wars this year, including potentially higher U.S. import prices due to steeper tariffs, he adds. The U.S. and its trading partners could still reach an agreement before the new tariffs come into force on Tuesday, he notes. "But without a deal, financial markets' strong start to the year is set to come under pressure in the week ahead," he adds.([email protected])0810 GMT - The yen stands out in the wake of Trump's tariffs, declining slightly, while the Aussie and euro slid more than 1%. This raises the question of whether the JPY has finally reached a bottom, says Louis Gave of Gavekal Research. The BOJ is sounding more hawkish, setting the stage for rate differentials with the U.S. and EU to continue shrinking, he adds. Japanese financials are outperforming and taking the promise of BOJ hikes in stride. Japan could also find itself in Trump's tariff crosshairs, as his administration has been vocal about revaluing undervalued currencies, and the yen is excessively cheap relative to most other major currencies, he says. "Any one of these factors would make it risky to stay short the yen. Together, they may well provide a catalyst for a move higher," he says. ([email protected])0800 GMT - President Trump's move to impose tariffs on Canada, Mexico and China is expected to draw retaliatory tariffs, says Vasu Menon, OCBC's managing director of investment strategy. This could disrupt over $2.1 trillion in annual two-way U.S. trade with the three trading partners, he writes in a commentary. Canada will impose 25% tariff on over $100 billion of U.S. products, while Mexico has pledged retaliatory tariffs. China says it will file a complaint at the World Trade Organization and take countermeasures to defend its rights, without announcing any new tariffs, he notes. Trump's orders comprises retaliation clauses that will raise U.S. tariffs if the countries respond in kind, he says. "If he executes on these clauses, we could see the trade war escalating," he adds.([email protected])0759 GMT - The euro falls after President Trump said he was likely to impose new tariffs on the EU after similar moves on Canada, China and Mexico. Trump said on Sunday that tariffs on the EU would "definitely happen" soon. He took a softer line on the U.K., saying that tariffs might happen but was sure a deal could be made as Prime Minister Keir Starmer has been "very nice." The euro falls 0.2% to $1.0229 after hitting a three-week low of $1.0213 overnight, according to FactSet. Against sterling, the euro falls 1.1% to a near four-week low of 0.8320. ([email protected])