So far, today we are witnessing a slight decline in currencies and equities compared to last night’s trading. With S&P 500 futures down 2%, the US dollar is also mostly struggling. This has been a major topic since the tariff crisis began, with traders seemingly questioning the dollar’s status as a reserve currency and safe haven. The USD/CHF pair is currently down 1.6%, wiping out almost all the jump it has made since Trump announced the suspension of tariffs:
In other markets, the EUR/USD pair rose 0.9% to 1.1045, erasing the decline caused by Trump’s call for a suspension of-for-tat tariffs. USD/JPY fell 1.1% today to currently 146.08. In addition, GBP/USD rose 0.4% to 1.2870 and NZD/USD rose 0.5% to 0.5675. AUD/USD fell) is flat at 0.6150, but this is likely due to the escalation of the trade dispute between the United States and China.
With the bond market returning to some calm and its collapse halted, it is interesting to note the latest developments related to the dollar.
With Trump’s decision to suspend tariffs taking effect, there is still a significant change in the global trading system. 125% tariffs were imposed on China in the latest wave of tariffs, plus 10% comprehensive tariffs on all other countries. It also imposed 25% tariffs on steel and aluminum, as well as 25% tariffs on cars. Added to this are the tariffs imposed on Canada and Mexico. At this point, developments are difficult to follow, but this is by no means good.
Arguably, when measuring the suffering of global trade, it is not so much about how wide it is as about its depth, as the focus is largely on China.
Momentum wanes after tariff war eases
Trump’s cessation of tariffs improved markets yesterday, but as the dust settles, we have to grasp what it all means in the big picture. In the current situation, the trade war has narrowed in scope, but deepened. The focus is now on China, and talks have not yet begun on that front, according to White House economic adviser Kevin Haslett.
At the very least, China has refrained from escalating tariffs, for now. However, this chart is not accurate with respect to the world’s two largest economies.
Although Trump has imposed comprehensive tariffs of only 10% on all other countries, he is still raising the effective rate of tariffs to the highest level since the thirties.
So, there are some ideas worth thinking about for markets in trying to understand the potential implications of all this for the global economy.
But, at least for now, the bond market has remained calm. But we are seeing equity markets retreat from euphoria, while the US dollar is taking a hit again across the board.
US 10-year yields maintain relative calm, stabilizing at around 4.30%, while 30-year yields settled at around 4.75% on the day. The 30-year bond auction is still coming, so stay tuned for it too.
U.S. futures fell as traders and investors digested the whole situation. Yesterday’s positive rally was historic, but short coverage and declining liquidity certainly exacerbated these moves. We’ll see what happens next as trade headlines remain at the center of attention, as does the U.S. CPI report, albeit supposed to be set aside in a week like this.
Dollar continues to fall amid trade turmoil and gold rises
The U.S. dollar fell again against the euro and other major currencies on Thursday after President Donald Trump abruptly halted higher tariffs on all countries except China, adding to investor uncertainty.
The U.S. dollar lost more than 1% against the single currency. As markets also expected data later in the day showing U.S. inflation slowing in March. The dollar continued to weaken against the Japanese yen and the Swiss franc, which are considered safe-haven currencies.
Market players are optimistic about the US-China trade war, and tariffs as a whole, weighing on the global economy. Moreover, we are not even sure how much damage will be caused by the collapse of commodity trade. So, there’s something to keep in mind.
In the foreign exchange market, the US dollar is under pressure again as questions about its safe-haven status persist since the tariff crisis began. The EUR/USD pair surpassed the decline seen since Trump’s announcement of the tariff moratorium, rising more than 1% to 1.1070. Meanwhile, USD/JPY fell 1.5% to 145.50, and USD/CHF fell more than 2% to just under 0.8400 on the day.
Even despite concerns about China and the trade war, the AUD/USD pair managed to raise its price from 0.6150 to 0.6185 during the day – an increase of 0.5%.
In other markets, oil also fell as risk trading eased today. While gold continues to rise in this volatile and uncertain environment. The price of the precious metal rose more than 1% again today to exceed $3,100. It seems to be another interesting and exciting day in US trading later. So, get ready.
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