Markets got their hopes up once again, this time for a trade deal between the U.S. and China, but the optimism soon faded and risk assets suffered another bloodbath.
Here are the updates you need to know.
Headlines:
- Australia Westpac Consumer Confidence Index for April 2025: 90.1 (95.0 forecast; 95.9 previous)
- Australia NAB Business Confidence for March 2025: -3.0 (-3.0 forecast; -1.0 previous)
- Chinese Foreign Ministry said that they will take necessary measures against latest tariffs threat since the White House doesn’t seem to show willingness for serious talks
- Japan Eco Watchers Survey Outlook for March 2025: 45.2 (46.0 forecast; 46.6 previous)
- France Balance of Trade for February 2025: -€7.9B (-€5.5B forecast; -€6.5B previous)
-
Some major economies suffer downgrades to growth forecasts:
- UBS lowered eurozone growth estimate from 0.9% to 0.5% in 2025 as tariffs take effect
- Citi downgraded China’s GDP forecast from 4.7% to 4.2% this year
- German Economic Institute slashed growth forecast from 0.8% to 0.1% for 202
- BOE Deputy Governor Clare Lombardelli warned on Tuesday that U.S. tariffs will “depress” U.K. growth
- ECB policymakers reiterated their dovish bias:
- ECB official de Guindos acknowledged that the region is in a “moment of anxiety and uncertainty”
- ECB official Nagel mentioned that global growth prospects have deteriorated massively
- ECB official Simkus noted that another 0.25% rate cut is needed this month due to latest U.S. tariffs
- ECB official Stournaras said resurgence of inflation and inflation expectations could “delay or even halt the process of monetary policy normalization”
- U.S. Treasury Secretary Bessent discussed how they could end up with good trade deals as Trump participates in negotiations
- U.S. Trade Representative Jamieson Greer said Japan to get “priority” status in trading negotiations
- White House Press Secretary warned that 104% cumulative tariffs on China will take effect if the country doesn’t lift reciprocal measures by April 9
- U.S. NFIB Business Optimism Index for March 2025: 97.4 (100.0 forecast; 100.7 previous)
- Canada Ivey PMI for March 2025: 51.3 (48.0 forecast; 55.3 previous)
- FOMC voting member Goolsbee warned that tariffs were much worse than they were modeling, concerned about “cratering” consumer sentiment on high inflation anxiety and financial stability
- FOMC non-voting member Mary Daly said the central bank can “tread slowly and tread carefully” amidst tariff uncertainty
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
A bit of calm was seen in the markets after the previous day’s carnage, before some optimism about a potential deal between the U.S. and its trade partners kicked in.
Remarks from U.S. Treasury Secretary Scott Bessent citing how tariffs negotiations could result in good trade deals and how President Trump remains open to discussions spurred gains for risk assets. However, pessimism creeped back in after White House Press Secretary Leavitt warned about China’s 104% cumulative tariffs taking effect by midnight unless reciprocal measures are lifted.
As a result, U.S. equity markets took another massive tumble, with the S&P 500 index erasing its earlier gains and more while the Nasdaq wound up 2.1% in the red. WTI crude oil also plummeted, as downgraded global growth forecasts weighed on the outlook for the energy commodity, closing nearly 5% lower.
Bitcoin, which was already struggling to hold on to the $80,000 major psychological handle, fell through and tested the $76,000 levels. Gold, which was elevated for the most part of the day, gave up some ground to close 0.12% lower.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
Dollar pairs moved mostly in sync in the early trading sessions, as the U.S. currency spent most of the Asian session cruising lower against majority of its peers before pulling slightly higher as London markets opened.
Still, the dollar selloff resumed to its intraday lows as the session went on as some risk-on vibes were seen while traders got their hopes up for U.S. trade deals. This positive sentiment was short-lived, though, as the mood soured on warnings that China’s tariffs are bound to take effect by midnight if negotiations go south.
As a result, the dollar raked in strong safe-haven flows versus higher-yielding commodity currencies AUD (+0.46%) and CAD (+0.09%) while tumbling against lower-yielding rivals like JPY (-1.42%) and CHF (-1.50%). USD stayed in its ranges but still closed lower versus EUR (-0.32%) and GBP (-0.47%).
Upcoming Potential Catalysts on the Economic Calendar:
- Japan Consumer Confidence at 5:00 am GMT
- Japan Machine Tool Orders for March 2025 at 6:00 am GMT
- Bank of Japan Governor Ueda Speech at 6:15 am GMT
- ECB Official Cipollone’s Speech at 12:30 pm GMT
- U.S. Wholesale Inventories at 2:00 pm GMT
- U.S. EIA Crude Oil Stocks Change at 2:30 pm GMT
- Fed official Barkin’s Speech at 4:30 pm GMT
- U.S. FOMC Minutes at 6:00 pm GMT
- U.K. RICS House Price Balance at 11:01 pm GMT
- Japan Producer Prices Index growth rate at 11:50 pm GMT
All eyes and ears are on China and U.S. tariffs until the clock strikes midnight (ET) or noon in Beijing, as an eleventh hour deal could still lead markets to ease up on economic doomsday scenarios.
The spotlight could shift back to U.S. monetary policy later today, as the FOMC meeting minutes are up for release and are likely to provide more insights on future interest rate moves. However, markets could still take this report with a grain of salt since the discussions were held prior to the announcement of the latest batch of U.S. tariffs.
As always, stay nimble and don’t forget to check out our brand new Forex Correlation Calculator when taking any trades!
