One day ahead of President Donald Trump’s scheduled announcement of reciprocal tariffs, which will be accompanied by a Rose Garden event, the United States Dollar is trading stronger against most peers with a few exceptions
Overview
Reports from the Washington Post overnight indicated that White House staffers have created a proposal for tariffs of roughly 20% on “most” goods imported to the US, rather than targeting specific nations, placing this more on the side of a blanket levy than an approach based in true reciprocity. Concerns, following this report, of such a proposal’s impact on the US’ GDP are abounding, and equities are set to open lower for the first day of the new quarter in response.
This report, while boosting the Buck a bit today, could make it harder for USD to see a positive move on any announcements tomorrow, as it’s quite unlikely that tariffs announced by the Administration would be more harsh than a blanket 20%. Gold prices, a favorite for risk-off trading, have continued to climb. The European Union for its part has ratcheted up its rhetorical response to tomorrow’s tariff event, saying it will use a ‘broad range of options’ to retaliate against the US should Trump’s imposition of levies come to fruition. Similarly, in an announcement that defies decades of traditional geopolitical alignment, Chinese state media said yesterday that China, Japan, and South Korea are coordinating a response to US tariffs together. Though Japan and South Korea did downplay this announcement, any real alignment between these three nations is an historic development and is indicative of just how concerned the rest of the world is on the impact of new tariff policy. Many major economic forecasters, including Goldman Sachs and JPMorgan, have raised the chance of a recession in the US in the next 12 months, citing tariffs’ potential economic drag and heightened prices.
Key economic releases from the US do remain this week as well, though today the data calendar globally is fairly light. A few US PMI releases are due out today and Thursday, and employment data for March will be released Friday morning. Non-farm payrolls are expected to show the US economy added 140,000 jobs last month, a decrease from February’s figure.
What to Watch This Week…
- US Manufacturing PMI, Tuesday 10AM
- US ADP Employment Change, Wednesday 8:15AM
- US Services PMI, Thursday 10AM
- US Non-Farm Payrolls, Friday 8:30AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
JPY ⇑
Japanese Yen continues to be a big beneficiary of the world’s current flight to safety, at one point posting a half a percent gain against USD. Japan’s recent economic data, as well, has come in largely above market expectations, and traders have responded by moving the odds of a rate hike from the Bank of Japan forward in this calendar year. JPY’s traditional appeal as a safe haven currency has roared back in a big way, especially given that Japan is not a major exporter to the US. Other haven assets like CHF and Gold have also benefited from recent global economic uncertainty.
EUR ⇓
The single currency is losing a touch of ground against the Buck today following news that France’s Marine Le Pen, leader of the far-right National Rally party, has been convicted of embezzlement. With this conviction Le Pen is barred from electoral politics for 5 years, taking her out of France’s 2027 presidential election. French yields jumped to a session high on the news. German inflation also slowed more than expected in March, increasing 2.3% from this time last year. Expectations were for a showing of 23.4%, which would still have been less than last month’s 2.6% figure.
