In the wake of Trump’s "Liberation Day" tariff announcements, risk assets and the U.S. dollar were left reeling as the trade war intensified, with affected economies firing back, further clouding prospects for global growth.
Here are the developments you should be aware of:
Headlines:
- Australia’s S&P Global Services PMI for March 2025 came in at 51.6, slightly higher than the 51.2 forecast and rising from February’s 50.8.
- Australia’s trade balance for February showed a surplus of 2.97 billion, well below the 5.1 billion forecast, amid a 3.6% drop in monthly exports and a 1.6% rise in imports.
- Japan’s Jibun Bank Services PMI for March reached 50.0, surpassing the 49.5 forecast but falling short of the previous 53.7.
- China’s Caixin Services PMI for March recorded 51.9, beating forecasts slightly.
- Swiss CPI for March met expectations annually at 0.3% but was flat month-over-month.
Political tensions are also high. Russian President Putin announced a large military conscription, preparing for continued conflict if peace negotiations falter. Meanwhile, French President Macron urged European companies to halt investments in the U.S., promising a significant European response. German Chancellor Scholz echoed these sentiments, vowing a measured response to Trump’s tariffs. In economic updates, France’s HCOB Services PMI improved to 47.9, while Germany’s was at 50.9, both surpassing forecasts. The Euro area reported 51.0 in services PMI, again beating expectations. ECB policymakers, wary of U.S. tariffs, expressed caution. Yannis Stournaras and Nagel discussed potential rate cuts and economic reassessments, while de Guindos advised prudence amid trade uncertainties.
The U.K. reported a better-than-expected services PMI of 52.5 for March. Meanwhile, OPEC+ announced further oil production increases for May, with output potentially exceeding a 400K barrel per day hike. The Euro area’s Producer Prices Index rose to 3.0% year-over-year, slightly below forecasts.
The U.S. saw job cuts surge to 275.24k, missing forecasts, while Canada’s trade balance turned negative at -1.52B. In retaliation, Canadian PM Mark Carney announced tariffs targeting the U.S. auto industry. U.S. unemployment claims slightly improved but missed expectations, as did the trade balance, which narrowed less than forecast. Canada’s services sector struggled, hitting a services PMI of 41.2.
Fitch downgraded China’s debt rating over spending and tariff concerns, while the U.S. reported mixed services PMI results.
Market Summary:
Thursday was tumultuous for financial markets, with risk assets declining in the wake of Trump’s tariff announcements and ensuing retaliatory rhetoric. Leaders in France and Germany pledged to respond to higher tariffs, with Europe voting soon on countermeasures against U.S. steel and aluminum tariffs. European equities suffered, dragging down U.S. futures as well.
OPEC+’s decision to increase production contributed to the ongoing slump in crude prices. Bitcoin also slid, dropping from $85,000 to $83,000, and experienced further dips throughout the day.
Bond yields fell as nervous investors sought safety in treasuries. Gold, conversely, saw early profit-taking but then stabilized.
Currency Market Overview:
Despite major economic releases, the U.S. dollar faced pressure amid trade tensions. China posted a resilient services PMI, overshadowed by Australia’s export decline. Switzerland’s CPI was subdued, yet the franc gained against a weakening dollar.
U.S. employment data painted a grim picture, with substantial job cuts and a disappointing services PMI, setting the stage for a possible non-farm payroll miss. Nonetheless, the dollar managed a modest recovery near the New York session’s end as traders repositioned before the official job numbers. The dollar recorded its steepest losses against safe-haven currencies like JPY and CHF, also declining against the AUD and NZD.
Upcoming Economic Events:
The economic calendar is busy, with Japan, Switzerland, Germany, and France reporting important figures. Canada’s jobs report and the U.S. nonfarm payrolls will be in focus, attracting significant market attention. Speeches from Fed officials Powell, Barr, and Waller might also offer insights into future monetary policy.
In this volatile environment, keep an eye on trade-related news that could cause market fluctuations. And don’t forget to use our new Forex Correlation Calculator to enhance your trading strategies!
