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03/04/2025 - 07:40 UTCFollowing minor gains observed earlier in the week, the dollar index experienced a decline on Wednesday. This decline was directly subsequent to President Trump's address concerning tariffs, which was delivered before the White House. Furthermore, the dollar index's value continued its sharp downward trajectory in early trading on Thursday. The primary driver of this market sentiment shift was President Trump's announced plans for reciprocal tariffs against major United States trading partners, and his additional declaration regarding the imposition of universal tariffs on all imports entering the U.S.
On Wednesday, President Donald Trump enacted a series of reciprocal tariffs. A minimum 10% tariff will be applied to all imported goods, with specific nations facing higher reciprocal rates, set at 50% of the tariffs they currently impose on U.S. exports. The 10% baseline tariff is scheduled to take effect on April 5th, while the elevated tariffs will be implemented on April 9th. President Trump's calculation of other countries' tariff rates on U.S. goods factored in currency manipulation and trade barriers, including the European Union's Value Added Tax (VAT). China, which currently levies a 67% tariff on U.S. imports, will be significantly impacted, facing a new 34% tariff. This new tariff will be added to the existing 20% tariff on Chinese goods, bringing the total tariff rate to 54%. Furthermore, President Trump confirmed that the previously announced 25% tariffs on imported automobiles and auto parts will be implemented at midnight. He asserted that these measures are designed to reinstate American manufacturing dominance and are necessary to address unfair trade practices. In response, trading partners are anticipated to announce retaliatory measures, potentially triggering a trade war.
On Wednesday, Japan’s Nikkei 225 index experienced a significant downturn, plummeting by as much as 5.21% to reach its lowest point since early August 2024. However, Thursday's Asian trading session saw a notable rebound, with the index recovering by nearly 2.5% by 08:00 AM GMT on Thursday. The tariffs affecting Japan encompass both specific duties on items like automobiles and semiconductors, as well as reciprocal tariffs. Due to Japan's low existing tax rates, the reciprocal tariffs are expected to have a less substantial impact. Nevertheless, JPMorgan analysts suggest that a 25% tariff on automobiles, which constitute one-third of Japan’s exports to the U.S., could have a considerable effect. JPMorgan's analysis further pointed out that major Japanese automotive manufacturers, including Toyota, Honda, and Nissan, would likely encounter increased expenses, the possibility of raising prices, and a decrease in demand, which would negatively affect their earnings.
In China, Thursday's economic data revealed a stronger-than-anticipated expansion in the services sector for March, with the Caixin Services PMI exceeding forecasts at 51.9. Notwithstanding the positive data indicating growth in its services sector, China, being an export-oriented economy, anticipates a significant adverse impact from the newly imposed U.S. tariffs. This expectation has driven its stock markets into a downward trend on Thursday, evidenced by the China SSE's 0.27% decrease and the China SZSE's 1.4% decline. Similarly, the Hong Kong 50 index was trading significantly lower in early Thursday activity, showing a 1.23% drop at 08:15 AM GMT on the iFOREX platform.
Thursday's economic calendar will focus on the release of key U.S. data, including the ISM Services index, initial jobless claims, and the trade balance. Looking towards Friday, the Non-Farm Payrolls report and the unemployment rate figures are anticipated to garner attention, alongside a speech by Federal Reserve Chairman Powell on the economic outlook at the Society for Advancing Business Editing and Writing Annual Conference. In terms of corporate earnings, Conagra Brands is scheduled to publish its quarterly report later today.
The EUR/USD pair climbed on Wednesday, as the US dollar weakened following President Donald Trump’s announcement of more aggressive-than-expected tariffs on key trading partners.
Trump has unveiled plans to impose a 20% tariff on European Union goods, alongside higher duties on imports from some of the United States’ largest trading partners. These measures are set to take effect on April 9. In response, European Commission President Ursula von der Leyen strongly criticized the new tariffs, vowing swift retaliation. Market concerns over a potential global trade war, coupled with weaker-than-expected US economic data, have intensified fears of a sharp economic slowdown, further pressuring the US dollar.
Federal Reserve Governor Adriana Kugler warned on Wednesday that rising tariffs could contribute to prolonged inflationary pressures in the US. She expressed support for maintaining current interest rates as long as inflation risks remain elevated.
Investors now turn their attention to upcoming US economic data releases, including weekly Initial Jobless Claims, the final S&P Global Services PMI, and the ISM Services PMI.
Gold prices soared to an all-time high on Wednesday, driven by strong safe-haven demand following U.S. President Donald Trump’s sweeping trade tariff announcement.
Trump’s latest tariff measures, which include universal tariffs and specific duties on at least 18 countries, threaten to disrupt global trade and weigh on both U.S. and international economic growth. This triggered a sharp risk-off shift in financial markets, sending investors flocking to traditional safe havens like gold and the Japanese yen.
In a Wednesday evening address, Trump unveiled a 10% duty on all U.S. imports, alongside additional reciprocal tariffs on major economies, equivalent to half of their existing duties on American goods.
The White House clarified that certain essential imports, such as copper, pharmaceuticals, lumber, gold, energy, and select minerals unavailable in the U.S., would be exempt from the tariffs.
Despite these exemptions, investor concerns over the economic impact of Trump’s tariffs are rising. Since the burden of tariffs falls on U.S. importers, the resulting price increases are expected to be passed on to consumers. This scenario could drive inflation higher while also raising business costs, potentially slowing economic activity and increasing recession risks.
Oil prices tumbled on Wednesday, weighed down by growing concerns over a global economic slowdown and weaker demand following sweeping trade tariffs imposed by U.S. President Donald Trump.
Crude prices were already under pressure this week as momentum from a recent rebound faded. Meanwhile, escalating geopolitical tensions in the Middle East and between Russia and Ukraine provided only a modest risk premium for oil markets.
A larger-than-expected build in U.S. crude inventories further weighed on oil prices, heightening concerns over weakening fuel demand. Investors are also closely watching an upcoming meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+), where the group is expected to outline plans for increasing production.
On Wednesday evening, Trump announced a 10% tariff on most U.S. imports, alongside additional levies on major trading partners, with duties equivalent to roughly half of what those countries charge on American goods.
The US Tech 100 index closed lower on Wednesday as investor confidence wavered following President Donald Trump’s announcement of sweeping trade tariffs. The new measures raised concerns about global supply chain disruptions, particularly in the technology sector, which heavily depends on international manufacturing and component imports.
Semiconductor and hardware stocks led the declines in after-hours trading, as fears of rising costs and supply constraints unsettled investors. Despite strong U.S. economic data—including better-than-expected private payroll growth and factory orders—overall market sentiment remained cautious.
Looking ahead, traders are focusing on key economic indicators, such as the ISM Services PMI and Nonfarm Payrolls report, for further insights into the economy’s resilience. Additionally, Fed Chair Jerome Powell’s upcoming speech will be closely monitored for any signals on future monetary policy amid heightened trade uncertainty.
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