FOREX: EURCAD Reaches Four-Year High Above 1.55

The Telegraph reporting that US President Donald Trump is "considering plans to impose a 10 per cent tariff on the EU" but there isn't yet "broad agreement" within the administration. 

• Telegraph reports a source said there is not broad agreement "but some want to put a 10 per cent tariff on the EU".
• A second source said: “They’re talking about doing it on all imports from the EU... Trump is testing the water with Canada and Mexico and what he can get away with."
• Trump told reporters yesterday: “[Tariffs] will definitely happen with the European Union. I can tell you that, because they’ve really taken advantage of us — you know, we have [an] over $300 billion deficit...”
• An EU spokesperson said: “The EU would respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU goods. There is a lot at stake.”
• The response from EU leaders has hinted at a collective response but noted that Trump’s call for increased European defence spending is a credible concern.
• German Chancellor Olaf Scholz said the EU, “can react with its own tariffs but cooperation is more important,” noting that “more common defence procurement is needed in Europe.”
• Europe’s top diplomat, Kaja Kallas, said: “We were listening carefully to those words and of course we are also preparing on our side. What is clear, there are no winners in trade wars. If the U.S. starts a trade war, the one laughing on the side is China.”

• There has been very contained reaction to the Telegraph writing that Trump is considering hitting the EU with 10% tariffs on imported goods (full piece here).
• It’s likely down to the report noting that the source said Mr Trump’s administration said there is not broad agreement “but some want to put a 10 per cent tariff on the EU”.
• Euribor futures remain off highs although have still seen strong gains on the day as growth concerns dominate (with 25% tariffs currently set to be imposed on Canada tomorrow and 10% on China).  
• Those highs were seen both at initial Asia trading and shortly before Mexico announced its negotiation of a one-month delay.
• Largest declines on the day are seen in 1H26 contracts (-9bps) whilst the implied Euribor terminal sits with the Dec’25 at 1.895% (-8.5bps) for -20bps since shortly before Thursday’s ECB decision.
• 10bp of that post-ECB adjustment in the terminal was helped by softer than expected German national CPI inflation last week (despite the HICP figure coming in line). Today’s Eurozone services inflation helps build on that considering services momentum slowed to 2.45% on a 3m/3m annualized basis from 2.6% in December (in ECB own SA data, but presumably with still some analyst concerns over the SA process) for notably below the 3.9% Y/Y. 

Barack Ravid at Axios reporting on X that Israeli Prime Minister Benjamin Netanyahu is expected to extend his US trip this week due to "many requests by U.S. officials who want to meet him".

• Netanyahu is expected to be in Washington until Saturday, with a White House meeting with US President Donald Trump slated for Thursday - delayed from Tuesday. He is also expected to meet House Speaker Mike Johnson (R-LA), a group of Senators, and members of the House Foreign Relations Committee.
• Axios reported earlier today that the second stage of the Gaza ceasefire deal could hinge on the outcome of the Trump-Netanyahu meeting.
• The Times of Israel reports: "As per the terms of the ceasefire and hostage deal, negotiations for the second phase of the agreement must begin no later than the 16th day of the first phase, [today]... Despite this, the Walla news site reported Saturday that Netanyahu will not send a team of negotiators to Qatar until after his meeting with Trump."
• Israeli officials told Axios that Netanyahu, "is waiting to see where Trump stands on the second phase of the deal — which is supposed to lead to a permanent ceasefire, and a full withdrawal of Israeli forces from Gaza — before he makes any decisions."
• A senior Israeli official said: "The real serious negotiations over phase two will only begin after Bibi meets Trump. Nothing meaningful will happen before that."