Canadian jobs in focus as Trump warns of potential 35% tariff

• European rally falters as we await tariff letter.
• Bitcoin hits record high despite FOMC/ECB rate warnings.
• Canadian jobs in focus as Trump warns of potential 35% tariff.

The downbeat tone seen in European markets highlights an element of profit taking as we await news of the tariff letter promised to the EU by Donald Trump by the end of the week. Coming off the back of a week that has seen record highs for the FTSE 100, S&P 500, and Nasdaq, it is no wonder we are seeing things cool a little today. While the tariff deadline extension has provided some room to strike deals, the strength seen for equity markets could come into question if we continue to move forward without any particular progress.

Interestingly, the crypto market appears to have fired up over the second-half of the week, with Bitcoin hitting record highs of $118k. This hasn’t exactly come against a backdrop of higher rate cut expectations, with the FOMC minutes seeing members cite the potential for a pause throughout the remainder of 2025. Meanwhile, today has seen ECB board member Isabel Schnabel noting that the threshold for another rate cut is very high. Nonetheless, the growing tariff threat does provide the basis for investors to diversify away from US assets, with the recent record highs for gold and bitcoin highlighting the impact of rising debt, a falling dollar, and faltering trade relations.

Another day, another tariff announcement from Donald Trump, with the President seeking to levy a 35% tariff on their Canadian neighbours on 1 August. The Canadian reliance on US market exports provides a huge sensitivity to any measures that might damage demand seen from US businesses and consumers. Nonetheless, while we saw a sharp initial pullback for the Canadian dollar, much of the initial move has abated after a US official clarified that items under the USMCA may be exempt. Today sees the latest Canada jobs report, providing us with a fresh insight into just how damaging Trump’s policies have been for Canadian workers thus far. The USMCA exemptions are likely to have helped stave off some of the effects, but the fact that Trump is warning of higher tariffs does highlight the fact that any weakness evident today could be just the beginning.