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What’s happening: The US dollar recorded gains versus the euro on Tuesday, after remaining under pressure since the tariff announcements began.
What happened: The US dollar index, which measures the greenback’s performance versus a basket of major peers, had lost more than 3% last week.
The gains in the US dollar were limited due to investor concerns over the impact of tariffs on the economy.
Why it matters: US President Donald Trump had imposed 145% tariffs for China and 10% for most of its trading partners. Earlier this week, the Trump administration announced an exemption on smartphones and computers, while indicating a likely pause in auto tariffs as well.
Macro uncertainty due to continuous shifts in Trump’s stance on tariffs has forced investors to look for alternatives outside the US, weighing on the greenback.
Data released on Tuesday showed that US import prices declined in March, amid lower costs of energy products. However, US exports prices came in unchanged in the month, in-line with expectations.
Meanwhile, data from the Eurozone showed industrial production up 1.1% in February, following 0.6% growth in the previous month and topping market estimates of 0.3%. However, the ZEW Indicator of Economic Sentiment for the Eurozone dipped by 58.3 points to a reading of -18.5 in April, hitting the lowest level since December 2022.
The EUR/USD pair fell around 0.6% to 1.1283 on Tuesday, after hitting a three-year high of 1.1473 last week.
The US dollar index, which moved higher on Tuesday, gave up some gains this morning, falling around 0.4%. The EUR/USD forex pair rose 0.4%.
What to watch: Investors will continue monitoring tariff-related announcements from the US.
Data on inflation rate from the Eurozone (1300 UAE Time) will remain in focus. Analysts expect Eurozone’s annual inflation to ease to 2.2% in March, from 2.3% in the previous month. The European Central Bank is projected to cut interest rates by 25 basis points at its upcoming meeting on Thursday.
Data on retail sales (1630 UAE Time) and industrial production (1715 UAE Time) from the US will be released today. Retail sales in the US, which rose 0.2% in February, are expected to increase by 1.3% in March. Analysts expect industrial production in the US to decline by 0.2% in March, following a 0.7% gain in February.
Context: Equity markets in Asia traded lower this morning amid ongoing tariff concerns.
Details: Global investors remain concerned over continuous shifts in tariff announcements from the Trump administration.
Data released this morning from Japan showed the Reuters Tankan sentiment index for manufacturers rose to +9 in April, from a reading of -1 in March. However, the outlook for the next three months worsened amid rising concerns over US tariffs.
Meanwhile data from China showed GDP expanded by 1.2% in the first quarter, representing a slowdown from 1.6% in the previous quarter. The figure also missed market estimates of 1.4%. The latest reading represents the softest quarterly expansion since the second quarter of 2024.
China’s industrial production grew by 7.7% year-over-year in March, following a 5.9% rise in the January to February period. China’s retail sales also rose by 5.9% year-over-year in March, following a 4% gain in the January to February period.
Japan’s Nikkei 225 fell 0.63% to 34,050.61 this morning, while China’s Shanghai Composite slipped 0.6% to 3,247.92. Hong Kong’s Hang Seng Index shed 1.7% to reach 21,101.35.
What to watch: Investors await the release of economic data on balance of trade (0350 UAE Time) and foreign bond investment (0350 UAE Time) from Japan on Thursday. Japan reported a trade surplus of ¥590.53 billion in February, versus a year-ago deficit of ¥415.43 billion. analysts expect the country’s trade surplus to narrow to ¥485.3 billion in March.
Data on inflation rate from Japan (0330 UAE Time), due to be released on Friday, will also remain in focus.
Other Markets: US trading indices closed lower on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.38%, 0.17% and 0.18%, respectively.
US President Donald Trump blamed Ukrainian President Volodymyr Zelensky for starting the war with Russia. The news sent the USD/RUB pair higher in forex trading this morning.
Canada’s manufacturing sales grew 0.2% to C$72. billion in February, versus a preliminary reading of a 0.2% decline, lending support to the CAD/USD forex pair.
South Korea’s import prices rose 3.4% year-over-year in March, following a 4.3% gain in the previous month, sending the KRW/USD pair lower in forex trading this morning.
The American Petroleum Institute said that US crude oil inventories rose by 2.4 million barrels in the week ending April 11, compared to a decline of 1.057 million barrels in the previous week, which exerted pressure WTI crude oil prices.
Australia’s Westpac-Melbourne Institute Leading Economic Index fell by 0.1% in March, following a 0.1% gain in the previous month. However, the AUD/USD pair rose in forex trading this morning.
Eurozone’s current account (1200 UAE Time), Italy’s inflation rate (1200 UAE Time) and current account (1200 UAE Time), South Africa’s retail sales (1500 UAE Time), US MBA mortgage applications (1500 UAE Time), India’s M3 money supply (1530 UAE Time), capacity utilization (1715 UAE Time), manufacturing production (1715 UAE Time), business inventories (1800 UAE Time), NAHB housing market index (1800 UAE Time), EIA crude oil stocks (1830 UAE Time), EIA gasoline stocks change (1830 UAE Time) and EIA distillate stocks change (1830 UAE Time), Bank of Canada’s interest rate decision (1745 UAE Time), Russia’s PPI (2000 UAE Time), as well as Argentina’s balance of trade (2300 UAE Time).
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