Forexlive Americas FX news wrap: Huge market moves after US tariffs on Mexico and Canada

• Germany will set up €500 billion infrastructure fund and a special defense fund
• Trump tells advisors he wants to announce Ukraine minerals deal during Congress speech
• Hassett: If the fentanyl emergency were to be ended, then so would these tariffs
• Fed's Williams: There is a lot of uncertainty on how tariffs will play out
• Trump says he will hit Canada with reciprocal tariffs if Canada retaliates
• Lutnick: We are going to reset trade policy on April 2
• Trudeau: Canadians will not back down from a fight
• Ontario to place 25% export tariff on US electricity exports, threatens total cutoff
• Ted Cruz says he hopes tariffs won’t last an “extended period of time”
• Senate majority leader Thune: I hope Trump tariffs are a means to an end
• Scalise: If Mexico and Canada help us on fentanyl "those tariffs will probably go away"
• Some signs point to Sunday as a day for a potential reversal in North American tariffs
• What Scott Bessent said about tariffs and trade policy earlier today

Markets:

• Gold up $23 to $2917
• US 10-year yields up 2.2 bps to 4.20%
• WTI crude oil flat at $68.36
• S&P 500 down 1.2%
• EUR leads, USD lags

Every day is an adventure under Trump and there are 1418 until the 2029 inauguration. Today was a particularly wild one as tariffs went into effect on Mexico, Canada and China.

Hope for some kind of climb-down was quickly dashed as Lutnick took a hard line, though still focused on fentanyl. Several senators said they hoped tariffs wouldn't last long but there were never any strong signals that would be the case. The only thing to cling to -- perhaps -- was a Mexican delay until Sunday on retaliation, which is the same day the Canada's Liberal Party will pick a replacement for Trudeau. That could be a day for a reset and we're carefully watching for any signs of a thaw.

At the same time, you have to price in a much higher chance of serious US tariffs on April 2, which is Trump's 'reciprocal' date. We're also expecting a healthy dose of inflammatory rhetoric in tonight's Congressional speech from Trump.

The moves in market were intense as heavy selling of risk assets took place into the European close but from there a big rebound ensued. That led to impressive gains in AUD and NZD while CAD even managed to grind out a small gain.

The euro got a lift from big spending intentions in Germany and the pound was also strong. Deutche Bank had some interesting words about the US dollar's safe haven status that are sure to do the rounds (see earlier posts) and the US dollar was the laggard today. The euro looks to be breaking out of its recent range and the underlying dynamics of the FX market may be changing on expectations of slower US growth and perhaps tighter US fiscal policy than assumed.

For now, it's tough to even step back for a moment to digest it because the news flow is so intense with more to come.