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11/04/2025 - 07:28 UTCThe U.S. Dollar Index (DXY) remained under pressure on Thursday, closing the session with sharp losses of 1.95%, according to data from the iForex platform, after earlier recovery attempts failed to gain traction. Greenback’s decline accelerated amid mounting concerns over the economic fallout from newly announced tariff hikes and dovish-leaning commentary from Federal Reserve officials. Growing policy uncertainty, combined with recession fears, continued to weigh heavily on market sentiment.
The White House confirmed a significant escalation in trade measures, lifting the effective tariff rate on Chinese imports to 145%. In response, Fed Presidents Jeff Schmid and Lorie Logan issued warnings that such aggressive trade actions could stoke inflationary pressures and disrupt labor market dynamics. While calling for caution, officials also acknowledged the increasing complexity of managing inflation while supporting employment in a more turbulent global trade environment.
Meanwhile, U.S. jobless claims data offered a mixed picture: initial claims edged higher to 223,000, while continuing claims eased to 1.85 million, signaling uneven labor market momentum. Although Fed speakers avoided direct reference to the March CPI report, markets remain sensitive to upcoming inflation data—particularly as shifting trade policy adds a fresh layer of uncertainty to the Fed’s outlook.
Asian markets fell sharply on Thursday, with Japan leading regional losses amid escalating fears over a deepening U.S.-China trade conflict, which overshadowed any relief from the U.S. decision to delay certain tariff measures. Regional indices tracked a sharp overnight decline on Wall Street, where an early rebound—sparked by President Donald Trump’s 90-day exemption on reciprocal tariffs—was quickly erased by growing concerns over worsening U.S.-China tensions. Washington's move to impose significantly higher tariffs on Chinese goods provoked strong responses from Beijing, including threats of retaliation and little indication from either side of resuming negotiations soon. Japan’s Nikkei 225 and Japan 100 were the worst performers in the region as trade-sensitive sectors bore the brunt of the selloff. Automakers and technology firms led the declines, reflecting Japan’s significant export exposure to both the U.S. and China.
Gold surged to a fresh record high on Thursday as safe-haven demand intensified amid escalating U.S.-China trade tensions. A weaker U.S. dollar also supported gains, making gold more attractive to foreign buyers. Broader uncertainty over trade policy and global growth continues to boost demand for the yellow metal.
To wrap up the week, markets will focus on Friday’s key data releases, including the U.S. Producer Price Index (PPI) for March and the University of Michigan’s preliminary Consumer Sentiment Index. Sentiment is expected to weaken further as consumers grow increasingly concerned about the economic impact of escalating trade tensions and tariff policies. The report will also include updated 1-year and 5-year inflation expectations, offering insight into how households view future price pressures amid ongoing uncertainty.
The EUR/USD currency pair surged to its highest level in nearly two years on Thursday, decisively breaching the 1.1200 mark and closing above it for the first time in 21 months. The sharp rally follows easing market tensions, sparked by a last-minute reversal in tariff policy from the Trump administration. The unexpected shift has triggered a broader softening in U.S. Dollar flows across global markets.
Adding to the bearish pressure on the greenback, U.S. inflation data released earlier this week came in well below expectations. Core Consumer Price Index (CPI) inflation slowed to 2.8% year-over-year in March—the lowest reading in four years—after remaining above 3.0% for eight consecutive months. Headline CPI also declined, easing to 2.4% year-over-year. These figures pose a growing challenge for the Federal Reserve, whose long-standing inflation control efforts risk being undermined if protectionist trade measures resurface.
Gold prices surged to a record high on Thursday, extending a recent rally as demand for safe-haven assets remained strong amid growing concerns over the escalating U.S.-China trade war. Gold prices ended the session with huge gains of 3.28%.
The yellow metal posted impressive gains this week, outperforming all other metals as investors flocked to bullion and the Japanese yen for protection. A sell-off in U.S. Treasury prices added fuel to the trend, even as yields rose sharply.
The surge in gold was driven by heightened volatility in risk-sensitive assets as the U.S. and China imposed heavy tariffs on each other this week. Trump also indicated that he was waiting for China to approach him for trade talks, though Beijing showed no signs of backing down.
Soft U.S. consumer inflation data further weighed on the dollar, with traders increasingly betting on earlier interest rate cuts by the Federal Reserve.
Oil prices fell sharply on Thursday, erasing the previous session's rally as investors reassessed the impact of a planned pause in U.S. tariffs and shifted their focus to the intensifying trade war between Washington and Beijing.
Both contracts WTI and Brent rose on Wednesday after U.S. President Donald Trump announced a temporary halt to the broad tariffs he had imposed on several U.S. trading partners just a week earlier. However, Trump's reversal was short-lived, as he also raised tariffs on China. U.S. tariffs on Chinese imports now total 145%, the White House confirmed on Thursday.
Higher tariffs on China are expected to reduce U.S. crude exports to the country, leading to a buildup in supply and higher storage levels in the U.S.
The U.S. Energy Information Administration (EIA) revised its global economic growth outlook downward on Thursday and warned that tariffs could weigh heavily on oil prices. The EIA also lowered its U.S. and global oil demand forecasts for this year and next.
Wall Street stocks tumbled on Thursday as investors grew increasingly concerned about the economic impact of U.S. President Donald Trump’s escalating multi-front tariff war.
All three major U.S. stock indexes suffered significant losses, erasing much of the gains from the previous session. Worries over the intensifying trade war between the U.S. and China overshadowed optimism from positive economic data and ongoing U.S.-Europe trade negotiations.
Fed Governor Michelle Bowman noted on Thursday that while the U.S. economy remains strong, the effects of Trump’s trade policies are still unclear. Meanwhile, Chicago Fed President Austan Goolsbee suggested that rate cuts could resume once the uncertainties surrounding trade policy are resolved.
First-quarter earnings season kicks off on Friday, with major banks including JPMorgan Chase, Morgan Stanley, and Wells Fargo set to report.
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