Although markets were off to a calm start for Monday, there was some buzz about a “triple blow” to U.S. stocks, bonds, and the dollar later in the day.
Read on to find out what that was about and which headlines drove price action in the past trading sessions:
Headlines:
- Over the weekend, U.S. President Trump announced a temporary exemption on electronics imports
- White House announced that they are coordinating tariffs discussions with leaders of Japan, India and South Korea
- U.S. Commerce Secretary Lutnick clarified that electronics would still fall under upcoming semiconductor-specific tariffs set to roll out in a month or two while Trump added that electronic goods were simply reclassified under a different tariffs bracket
- China New Loans for March 2025: 3,640.0B (4,000.0B forecast; 1,010.0B previous)
- New Zealand Composite NZ PCI for March 2025: 51.2 (50.5 forecast; 50.7 previous)
- New Zealand Services NZ PSI for March 2025: 49.1 (49.5 forecast; 49.1 previous)
- New Zealand Electronic Retail Card Spending for March 2025: -1.6% y/y (0.1% y/y forecast; -4.2% y/y previous)
- New Zealand Visitor Arrivals for February 2025: -2.3% y/y (14.0% y/y forecast; 13.4% y/y previous)
- China Balance of Trade for March 2025: 102.64B (84.0B forecast; 170.52B previous); Exports: 12.4% y/y (5.2% y/y forecast; 2.3% y/y previous); Imports at -4.3% y/y (-1.0% y/y forecast; -8.4% y/y previous)
- Japan Capacity Utilization Rate for February 2025: -1.1% (-0.6% forecast; 4.5% previous)
- Japan Industrial Production (Final) growth rate for February 2025: 2.3% m/m (2.5% m/m forecast; -1.1% m/m previous); 0.1% y/y (0.3% y/y forecast; 2.2% y/y previous)
- Swiss Producer & Import Prices for March 2025: 0.1% m/m (0.3% m/m forecast; 0.3% m/m previous); -0.1% y/y (0.1% y/y forecast; -0.1% y/y previous)
- Canada Wholesale Sales (Final) growth rate for February 2025: 0.3% m/m (0.4% m/m forecast; 1.2% m/m previous)
- Fed official Waller noted that new tariff policy is one of the most significant economic shocks the U.S. economy has faced in decades
- Canada New Motor Vehicle Sales for February 2025: 125.4k (119.0k forecast; 121.6k previous)
- U.S. Fed Monthly Survey: Consumer Inflation Expectations for March 2025: 3.6% (3.3% forecast; 3.1% previous); Unemployment fears hit worst level since April 2020
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Some risk-on flows greeted market participants early Monday, thanks to weekend reports of U.S. President Trump granting a temporary exemption on electronics imports. To top it off, the White House also noted that they are arranging for trade discussions with Japan, India and South Korea.
WTI crude oil managed to stay afloat during the Asian session while bitcoin and U.S. equity futures raked in decent gains, but the rallies were cut short when the OPEC announced a downgrade of 150K barrels per day in its global demand forecast for the year on account of trade uncertainty.
Gold extended its slump upon seeing the OPEC report while Treasury yields stayed on the back foot, chalking up further losses after a U.S. Fed monthly survey revealed rising consumer inflation expectations and surging unemployment fears.
Concerns about the fiscal stability of the U.S., recession risks and inflationary pressures from higher tariffs combined forces in what many dubbed as a “triple blow” to USD-denominated assets, dragging the dollar index back in the red by session’s end.
Still, U.S. equity indices managed to hold on to some of their earlier gains, with the S&P 500 index up 0.57% and the Nasdaq seeing a 0.64% lead despite dips in some tech sector shares like Nvidia and Amazon.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar still found itself on wobbly ground at the start of the Asian session, following through on last Friday’s selloff and a bit of risk-taking after positive trade developments over the weekend.
China’s trade balance, which turned out better than expected and reflected an impressive 12.4% year-on-year surge in exports, did little to stir the pot since the numbers were for the month of March i.e. before the latest slew of U.S. tariffs took effect.
Still, higher-yielding currencies continued to take advantage of risk-on vibes as the session went on while the Swiss franc veered away from the pack and sold off upon seeing weaker than expected PPI data. USD/CHF went on to climb to the .8270 area just before turning south and joining the dollar selloff that ensued as U.S. markets opened.
Further USD losses were seen after a U.S. NY Fed survey revealed rising consumer inflation expectations and a worsening labor market outlook, leading the dollar to close mostly in the red, except against the Canadian dollar which likely took some hits from falling crude oil prices. On top of that, Fed official Waller warned that the new tariffs regime poses one of the largest shocks that U.S. economy has faced in decades.
Upcoming Potential Catalysts on the Economic Calendar:
- Germany Wholesale Prices at 6:00 am GMT
- U.K. Employment Report at 6:00 am GMT
- France Final CPI Reading at 6:45 am GMT
- Germany ZEW Economic Sentiment Index at 9:00 am GMT
- Euro area Industrial Production at 9:00 am GMT
- Canada Housing Starts for March 2025 at 12:15 pm GMT
- Canada CPI at 12:30 pm GMT
- Canada Manufacturing Sales at 12:30 pm GMT
- U.S. NY Empire State Manufacturing Index at 12:30 pm GMT
- New Zealand Global Dairy Trade Price Index coming up
- U.S. Fed official Barkin’s Speech at 3:35 pm GMT
- U.S. API Crude Oil Stock Change at 8:30 pm GMT
- New Zealand Balance of Trade at 10:45 pm GMT
- Japan Reuters Tankan Index for April 2025 at 11:00 pm GMT
- U.S. Fed official Cook’s Speech at 11:10 pm GMT
It’s gonna be a busy day in terms of top-tier economic releases, as pound traders brace for the U.K. jobs report while Canada has its CPI data coming up – both of which are likely to influence their respective central banks’ policy biases.
Apart from that, be sure to keep your eyes and ears peeled for tariffs-related headlines that could stoke trade war jitters and cause overall risk sentiment change once again.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
