Tense Silence Before Tariff Thunder, Liberation Day Looms

Asian markets traded cautiously today as investors await the long-anticipated reciprocal tariff announcement from the US, dubbed “Liberation Day” by President Donald Trump. Following the mixed close on Wall Street, risk sentiment remains fragile, with traders in clear wait-and-see mode. However, the rebound in commodity currencies overnight hints that some market participants are leaning toward a less aggressive scenario unfolding — a bet that could quickly unravel if reality disappoints.

According to the White House, the tariff announcement is set to take place today, with Trump scheduled to speak at 4 p.m. ET in the Rose Garden. Rumors continue to swirl over the exact details, but there is increasing chatter that the US may impose a blanket 20% tariff on most imports, lower than a strict “reciprocal” application would suggest. That level, while significant, may be seen as a relief to markets bracing for worse.

Further, reports indicate that Treasury Secretary Scott Bessent has characterized the tariffs as a “cap,” suggesting that countries could negotiate lower rates if they meet US trade demands. This strategy, if confirmed, would effectively introduce a variable rate tariff regime that could evolve through bilateral talks.

However, this overlooks a major wildcard: retaliatory measures from major US trading partners, such as Canada, the EU, and potentially China, which could unleash a spiral of escalation in the weeks ahead. In any case, volatility could spike over the next 24 hours as traders digest the final scope and tone of the announcement.

In the forex markets, price action remains relatively tight, with all major pairs and crosses still trapped within last week’s ranges. Aussie leads the pack, followed by Kiwi and Loonie. On the other end, Euro is the weakest, with Sterling and Swiss Franc also underperforming. Dollar and Yen are holding middle ground for now. But this pecking order could shift quickly once the tariff announcement is out.

Technically, EUR/USD is worth a watch to gauge Dollar’s response to today’s tariff announcement. Firm break of 1.0857 resistance should confirm that correction from 1.0953 has completed. And larger rally from 1.0176 is ready to resume. However, firm break of 1.0731 will extend the correction from 1.0953 lower.

In Asia, at the time of writing, Nikkei is up 0.38%. Hong Kong HSI is up 0.17%. China Shanghai SSE is up 0.19%. Singapore Strait Times is down -0.16%. Japan 10-year JGB yield is down -0.005 at 1.499. Overnight, DOW fell -0.03%. S&P 500 rose 0.38%. NASDAQ rose 0.87%. 10-year yield fell -0.090 to 4.156.

BoJ’s Ueda: US tariffs pose short-term inflation risk, long-term growth uncertainty

BoJ Governor Kazuo Ueda said today that the ramifications of US tariff policy remain “highly uncertain” and could significantly affect global trade.

Speaking to Japan’s parliament, Ueda emphasized that the ultimate impact would depend on the “range and scale” of the tariffs being implemented. He also noted that beyond trade flows, a key concern lies in “how the tariffs could affect the sentiment and spending of households and companies.”

Ueda further highlighted that while US inflation may rise in the short term due to higher import costs, the longer-term effect is less predictable. He suggested that elevated tariffs could eventually weigh on US economic growth, which in turn might dampen inflationary pressures over time.

Fed’s Goolsbee warns of fear-driven uncertainty as tariff worries grow

Chicago Fed President Austan Goolsbee acknowledged in a Fox News interview that while hard data, like the low 4.1% unemployment rate, still point to economic resilience, soft data are painting a gloomier picture.

Goolsbee highlighted the noticeable decline in business and consumer sentiment. Goolsbee said that this shift reflects growing uncertainty and fear regarding tariffs.

“They don’t want to go back to the kind of inflationary environment that we had in ’21 and ’22. And we’re just going to have to see how this plays out,” he added.

Goolsbee emphasized that while imports make up only around 11% of the U.S. economy — potentially limiting the direct inflationary impact of tariffs — there are wider concerns.

“The fear is if it jumps out of the 11% lane,” he warned, noting that cascading effects from uncertainty could stall consumer spending or business investment.

Looking ahead

The European calendar is empty today. US will release ADP employment and factory orders.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.4264; (P) 1.4339; (R1) 1.4380; More…

USD/CAD reversed after edging higher to 1.4414, but stays in established range. intraday bias remains neutral for the moment. Overall, corrective pattern from 1.4791 is still extending. On the upside, break of 1.4414 will argue that it’s still in the second leg. Intraday bias will be turned back to the upside fro 1.4541 resistance first, and then 100% projection of 1.4150 to 1.4541 from 1.4234 at 1.4625. On the downside, though, break of 1.42324 support will suggest that the third leg has already started for 1.4150 and below.

In the bigger picture, long term up trend is tentatively seen as resuming with prior breach of 1.4667/89 key resistance zone (2020/2015 highs). Next target is 100% projection of 1.2401 to 1.3976 from 1.3418 at 1.4993. This will remain the favored case as long as 1.3976 resistance turned support holds (2022 high), even in case of deep pullback.