USD softer as tariff concerns persist - Scotiabank

The US Dollar (USD) is weaker as US equity futures dip in response to Treasury Secretary Bessent expressing no concern about recent equity market volatility and President Trump saying that reciprocal and sectoral tariffs will be announced on April 2, apparently upping the tariff ante yet again. It was not clear from the remarks whether reciprocal tariffs will be added on top of sectoral tariffs or not, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

President Trump threatens reciprocal and sectoral tariffs April 2

"Stocks perked up nicely on Friday but these comments suggest there is still immense uncertainty ahead for investors to contend with and that there is little chance of a significant pick up in risk appetite for now. US equity futures are weaker on the session currently. International investors may be looking hard at US returns and allocations amid signs of slowing global growth around US tariff action given that, since the election, the USD, US corporate high yield bonds and stocks have underperformed relative to Treasurys and other, foreign assets."

"Meanwhile, policymakers in Europe and China are channeling policy efforts to provide more stimulus (China outlined plans to boost incomes and consumption earlier todfay). More weakness in the USD looks quite likely moving forward. It's a busy week for central banks but many policy decisions are expected to result in unchanged rates (the Fed, BoE, BoJ, BCCh). The SNB may ease 25bps while the consensus expects a 100bps increase in Brazil's Selic rate. "

"On the charts, the DXY appears to be breaking down from the consolidation range that held for most of last week when DXY rebounds were capped around 104.05/10. Index losses below 103.7 are bearish on the short-term chart and point to a push to test key support at 103.2; broader points still suggest a drop to the 100/102 range."