US dollar index heads towards 100 on Trump speech

Today’s headlines

What’s happening: The US dollar rose this morning following a speech by President Donald Trump.

What happened: During his prime-time speech, Trump said that the country’s “core strategic objectives” in the ongoing war with Iran were close to being achieved.

The US President did not provide any insight into when the war may end, reinforcing concerns around inflation.

Why it matters: The ongoing Middle East conflict has entered its fifth week, raising energy prices and exerting pressure on global markets after Iran closed the Strait of Hormuz.

On Tuesday, Trump indicated that troops would leave Iran soon, even if no deal is reached.

Prospects of the US-Iran war ending provided a boost to stock markets around the globe and weighed on the US dollar over the past two sessions.

The US dollar, which benefited from safe-haven demand since the start of the war, surged 2.3% in March. The conflict triggered sharp gains in crude oil prices, raising inflation concerns, resulting in investors scaling back speculations of the Federal Reserve cutting interest rates this year.

During his prime-time speech on Wednesday, Trump once again warned of strikes on Iran over the next two to three weeks, including potential strikes on civilian infrastructure, in case no deal is reached.

Trump added that Iran had requested a ceasefire, while Tehran quickly denied the claim.

Data released on Wednesday showed that the ISM manufacturing PMI rose to 52.7 in March from 52.4 in the previous month, topping market estimates of 52.5. The latest reading signalled the strongest expansion in factory activity since August 2022.

Retail sales climbed 0.6% in February, recovering from a 0.1% decline in January. This marked the strongest growth in seven months.

US private employment rose by 62,000 jobs in March, compared to a 66,000 gain in the previous month. The figure also came in higher than market estimates of a 40,000 gain.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose around 0.3% to 99.92 this morning.

The EUR/USD forex pair fell 0.4% to 1.1548 this morning, while the GBP/USD pair declined almost 0.5% to 1.3247. The USD/JPY pair gained around 0.4% to 159.46.

What to watch: Investors will keep an eye on the developments related to the conflict in the Middle East.

Data on US balance of trade (1630 UAE Time) and initial jobless claims (1630 UAE Time) will be released today. The US trade deficit, which shrank to $54.5 billion in January from $72.9 billion in the previous month, is expected to widen to $59.2 billion in February. Initial jobless claims, which climbed by 5,000 to 210,000 during the third week of March, are expected to rise to 212,000 in the latest week.

The markets today

Nike in focus today after releasing earnings results for its third quarter

Context: Shares of Nike fell on Wednesday despite the company reporting upbeat fiscal third-quarter results.

Details: Nike reported revenue of $11.28 billion for the third quarter, slightly ahead of market estimates of $11.24 billion. The company’s adjusted earnings came in at 35 cents per share, better than Wall Street expectations of 31 cents per share.

The athletic apparel giant’s revenue growth was flat, while gross profit margin shrank for the sixth consecutive quarter, declining 130 basis points (bps) to 40.2%, mostly due to tariffs.

The company’s sales in North America grew by 3%, while sales in China declined 10% during the latest quarter.

Nike’s soft outlook for the fourth quarter weighed on sentiment. Management guided to fourth-quarter sales of $10.656-$10.878 billion, below market estimates of $11.236 billion.

How shares responded: Nike’s shares dipped 15.5% to close at $44.63 on Wednesday following the release of quarterly results. The stock has lost around 27% over the past month.

What to watch: Investors will continue monitoring the overall global market sentiment and the impact of tariffs, which is expected to significantly impact the company’s sales ahead.

Other Markets: Asian indices traded lower this morning, with the Japan’s Nikkei 225, Hong Kong’s Hang Seng index and China’s Shanghai Composite index down by 1.88%, 1.05% and 0.37%, respectively.

The news shaping the markets

Russia’s ⁠Ministry of Defence claimed that its military forces have taken full control of Ukraine’s Luhansk region. The news sent the USD/RUB pair lower in forex trading this morning.

South Korea’s annual inflation rate surged to 2.2% in March from 2.0% in the previous two months, lending support to the USD/KRW forex pair.

Mexico’s S&P Global manufacturing PMI climbed to 48.9 in March from 47.1 in the previous month. Manufacturing activity remaining in the contraction zone sent the USD/MXN pair higher in forex trading this morning.

Canada’s S&P Global manufacturing PMI declined to 50.0 in March from 51.0 in the previous month, lending support to the USD/CAD forex pair.

Australia’s goods trade surplus rose to A$5.69 billion in February from a revised A$2.26 billion in January. However, the AUD/USD pair fell in forex trading this morning.

What else to watch today

Brazil’s IPC-Fipe inflation (1200 UAE Time) and industrial production (1600 UAE Time), UK’s DMP 1Y CPI expectations (1230 UAE Time) and DMP 3M output price expectations (1230 UAE Time), Italy’s retail sales (1300 UAE Time), Turkey’s foreign exchange reserves (1530 UAE Time), US Challenger job cuts (1530 UAE Time), Canada’s balance of trade (1630 UAE Time), goods trade balance (1630 UAE Time), continuing jobless claims (1630 UAE Time), EIA natural gas stocks change (1830 UAE Time), 15-year Mortgage Rate (2000 UAE Time), Baker Hughes oil rig count (2100 UAE Time) and Baker Hughes total rigs count (2100 UAE Time), as well as Singapore’s SIPMM manufacturing PMI (1700 UAE Time).