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What’s happening: The Japanese yen recorded gains against the US dollar on Tuesday, ahead of the Trump administration’s latest tariff plans.
What happened: Data released by the US signalled weakness in the country’s manufacturing activity and labour market.
Speculations of the Bank of Japan continuing to raise its benchmark interest rates after strong consumer inflation figures from Tokyo on Friday lent support to the yen.
Why it matters: US manufacturing activity shrank in March after expanding for two months in a row, while a measure of inflation accelerated to the highest level in almost three years.
The ISM manufacturing PMI tumbled to 49 in March, from a reading of 50.3 in February. The figure also missed market estimates of 49.5. The survey’s measure of pricing pressures rose to 69.4, from 62.4 in the previous month, hitting the highest reading since June 2022.
Other data released showed the number of job openings in the US declined by 194,000 to 7.568 million in February. The figure came in below projections of 7.63 million.
While the Bank of Japan prepares for rate hike, the Federal Reserve is looking to cut rates. Tepid data releases from the US warrant the Fed to cut interest rates, while inflation concerns due to the Trump administration’s tariff policies have tied the central bank’s hands.
US President Donald Trump warned of reciprocal tariffs on Wednesday in a bid to increase revenue to offset his proposed tax cuts.
Meanwhile, data released from Japan showed the Au Jibun Bank manufacturing PMI came in at 48.4 in March, up slightly from a preliminary reading of 48.3, but below the previous month’s 49. Japan’s unemployment rate declined to 2.4% in February, from 2.5% in January.
The Japanese yen received support from investors looking for safe-haven currencies when giving up the greenback in the current environment where higher tariffs are expected to weigh on economic growth in the US.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, was almost flat on Tuesday.
The USD/JPY forex pair dipped to 149.63 on Tuesday, while the EUR/JPY pair fell to 161.50.
What to watch: Investors will watch tariff-related announcements from the Trump administration.
Data on weekly jobless claims and non-farm payrolls from the US, due this week, will also remain in focus.
Context: Crude oil prices edged higher on Wednesday as investors braced for announcements of reciprocal tariffs by the US.
Details: The Trump administration is expected to announce reciprocal tariffs today, although there have been no indications of their size or scope.
President Trump suggested that tariffs would impact several nations, fuelling global economic growth concerns, which impacts energy demand.
Meanwhile, oil prices continued to be supported by Trump’s threats of tariffs on Russian oil. Some weakness in the US dollar also lent support to oil prices.
The American Petroleum Institute said that US crude oil inventories had risen by 6.037 million barrels in the week ending March 28, following a decline of 4.6 million barrels in the previous week.
WTI crude oil prices gained more than 0.1% to reach $71.30 a barrel this morning, while Brent crude rose by 0.1% to $74.55 a barrel.
In other energy trading, gasoline rose by 0.2% to $2.3071 a gallon, while heating oil added 0.4% to $2.2975 a gallon. Natural gas bucked the trend and edged lower to $3.950 per million British thermal units.
What to watch: Investors await the release of the Energy Information Administration’s
crude oil stockpiles report (1830 UAE Time).
Crude oil inventories in the US declined by 3.341 million barrels in the week ended March 21, compared to market estimates of a 1.6 million draw.
Other Markets: US trading indices closed mostly higher on Tuesday, with the S&P 500 and Nasdaq 100 up by 0.38% and 0.82%, respectively, and the Dow Jones index down by 0.03%.
Ukraine saw its first night of a pause in Russian drone attacks since December 2024. The news sent the RUB/USD pair lower in forex trading this morning.
Australia’s private house approvals increased by 1% to 9,203 units in February, following a 1.4% gain in January, lending some support to the AUD/USD forex pair.
Malaysia’s S&P Global manufacturing PMI dipped to 48.8 in March, from 49.7 in the previous month. The region’s manufacturing activity contracting for the tenth straight month sent the MYR/USD pair lower in forex trading this morning.
Indonesia’s S&P Global manufacturing PMI declined to 52.4 in March, from 53.6 in February, exerting pressure on the IDR/USD forex pair.
New Zealand’s number of building permits rose by 0.7% to 2,791 units in February, sending the NZD/USD pair higher in forex trading this morning.
Brazil’s IPC-Fipe inflation (1200 UAE Time) and industrial production (1600 UAE Time), US MBA mortgage applications (1500 UAE Time), ADP employment change (1615 UAE Time) and factory orders (1800 UAE Time), India’s M3 money supply (1530 UAE Time), Singapore’s SIPMM manufacturing PMI (1700 UAE Time), as well as Russia’s unemployment rate (2000 UAE Time), business confidence (2000 UAE Time), real wage growth (2000 UAE Time) and retail sales (2000 UAE Time).
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