Tariff panic sees dollar drop

Daily Currency Update

There was turmoil on foreign exchange markets yesterday as the implications of Donald Trump's trade tariffs hit home. Some of the swings were akin to the violent moves last seen in March 2020 when the world locked down in response to the pandemic. Around 11pm on April 2nd EUR/USD was at 1.08, 12 hours later it touched 1.1150 an enormous advance as panic saw the dollar dumped and massive losses on equity markets around the world.

The tariffs unveiled were at the more extreme end of what had been expected and prompted the chances of a US recession this year to grow to 50% according to Polymarket. GBP/USD briefly touched 1.32 before it and many other currency pairs started to retrace. Trump has indicated he is willing to reduce tariffs if countries offer something “phenomenal” in return. Some of those affected such as the EU and China have promised to respond with like for like tariffs, however, the UK looks set to try and negotiate away the charges. EUR/USD is back down to around 1.10 and GBP/USD is back to 1.30.