ForexLive European FX news wrap: Safety bids stick as Trump tariffs loom

Headlines:

• Gold thrives as stagflationary risks continue to increase
• The gold train marches on for now
• USD/JPY slides lower as risk aversion grips markets to start the week
• Traders increase easing expectations for all central banks amid the global growth fears
• France’s Le Pen found guilty in case over misuse of parliamentary funds
• France’s Le Pen reportedly receives immediate election ban
• ECB president Lagarde: We’re almost at our inflation target
• ECB’s Panetta: The fight against inflation cannot be considered over
• Bavaria March CPI +2.3% vs +2.4% y/y prior
• Italy February preliminary CPI +2.0% vs +1.6% y/y expected
• Germany February import price index +0.3% vs 0.0% m/m expected
• Germany February retail sales +0.8% vs 0.0% m/m expected
• UK February mortgage approvals 65.5k vs 65.6k expected
• No Putin-Trump call scheduled so far for this week

Markets:

• JPY leads, AUD and NZD lag on the day
• European equities lower; S&P 500 futures down 1.2%
• US 10-year yields down 6.9 bps to 4.186%
• Gold up 1.0% to $3,113.42
• WTI crude up 0.1% to $69.43
• Bitcoin down 0.5% to $81,961

As we get closer to Trump’s so-called Liberation Day, markets are cowering in fear and seeking shelter in safe haven assets to start the new week. Trump’s tariffs are the main source of worries, with weekend news suggesting he may not take a targeted approach and go with broad-based with high tariffs.

That kept risk sentiment on the defensive right from the get go and things stuck that way in European morning trade as well.

Equities suffered throughout the session with European indices hammered down by around 2% across the board now. As for US futures, the losses kept piling on with S&P 500 futures having been down around 0.6% at the start of the session to now be down 1.2%. Nasdaq futures are down 1.6% currently as tech shares are being crushed ahead of the open.

In FX, the Japanese yen is the main beneficiary amid a bid in bonds as well. 10-year Treasury yields are down nearly 7 bps and that’s dragging down yen pairs to start the week. USD/JPY itself is also down 0.4% to 149.25 currently but fell to a low of 148.70 earlier in the session.

Meanwhile, the dollar is keeping steadier elsewhere while commodity currencies are the ones dragged through the mud. AUD/USD was lightly changed early on but is now down 0.6% to 0.6250 while USD/CAD is marked up by 0.2% to 1.4350 currently.

As traders look to traditional safe haven assets like the yen and bonds, gold is also another big beneficiary from all this. The precious metal climbed to a high of $3,128 at one stage but is still seen up 1% on the day to $3,113 at the moment.

Besides the focus on risk aversion, we also got a political bombshell in France as far right leader Marine Le Pen was found guilty in her graft trial. And that saw the French court sentence her to a five-year political ban, making her ineligible to run for presidency in 2027 – in which she has been the frontrunner.

And there was also inflation data from Germany and Italy. The former showed some stickiness in price pressures while headline numbers in the latter also jumped higher. However, Italian core inflation remained unchanged in February and still kept under 2%. So, that offers some comfort to the ECB after the softer French and Spanish readings last week.

This article was written by Justin Low at www.forexlive.com.