31/03/2025 - 07:35 UTCOngoing investor anxiety regarding U.S. President Donald Trump’s tariff agenda has contributed to the U.S. dollar's continued depreciation against major currencies. This is reflected in the dollar index (USDX) on the iFOREX trading platform, which has recorded consecutive losses of 0.26% and 0.23% over the past two daily sessions. While Friday’s strong Core PCE Price Index data provided some support, limiting the dollar's decline, fears of a U.S. recession persisted, with Goldman Sachs analysts estimating a 35% probability of an economic slowdown within the next 12 months.
Elsewhere in Asia, equity markets experienced a significant downturn, primarily due to increasing risk aversion. As of 07:53 AM GMT Monday, the Japan 225 had fallen by 1.35%, the China SZSE was down by around 1%, and the Hong Kong 50 had lost 1.22%. This negative sentiment was largely fueled by expectations of additional trade tariffs from U.S. President Donald Trump later in the week, following a Wall Street Journal report indicating his consideration of more substantial and wider-ranging tariffs on key U.S. trade partners. Despite positive Chinese business activity data, the China SZSE still declined. The regional slump was further compounded by a negative handover from Wall Street, which had plummeted on Friday after stronger-than-anticipated February inflation figures.
Last week, after President Trump announced automotive import tariffs, shares of American automakers Ford and General Motors saw declines of 2.99% and 6.34%, respectively. BofA analysts cautioned that these tariffs could significantly reduce domestic car sales, pointing out that imports constitute a substantial portion of the U.S. market, including up to 50% of light vehicle sales. Companies lacking U.S. production, such as Mitsubishi and Tata Motors, also experienced losses of 5.41% and 4.16%, respectively, amid expectations that high tariffs would severely impact their U.S. profitability. Bernstein estimated the total cost of these tariffs could reach around $100 billion, representing approximately 14% of the automotive sector's annual revenues.
Oil prices declined on Friday, with both WTI and Brent benchmarks falling by 1.12% and 2.15% respectively. This downturn followed Chinese media reports indicating the discovery of significant oil reserves in the South China Sea, which counteracted earlier concerns regarding tighter supplies and a slowing global economy. These losses ended a three-week streak of gains for crude prices, which had been primarily supported by increasing speculation of tighter supplies following U.S. President Donald Trump's threats of additional sanctions against Russia. Contributing to the overall geopolitical landscape, Trump had also threatened Iran with bombing if it did not agree to a new nuclear deal with Washington.
For the week ahead, attention will likely turn to U.S. ISM Manufacturing and Services PMIs, Non-Farm Payrolls, U.S. unemployment rate and a speech by Fed Chairman Powell about the economic outlook at the Society for Advancing Business Editing and Writing Annual Conference. Some price action could also be seen upon the release of JOLTS Job Openings, ADP Non-Farm Employment Change and U.S. Average Hourly Earnings.
The EUR/USD pair rose on Friday as the Euro strengthens following signals from the European Commission that it has prepared concessions for the United States to mitigate some tariffs imposed by President Donald Trump. Trump is expected to announce these tariffs on Wednesday.
On the economic front, preliminary inflation data from France and Spain for March indicated slower-than-expected price increases.
The pair gained traction as the US Dollar weakened following the release of the US Personal Consumption Expenditures (PCE) Price Index for February. The US Dollar Index slipped toward despite the report showing core PCE inflation—excluding food and energy—rising 2.8% year-over-year, exceeding estimates of 2.7% and the previous reading of 2.6%. On a monthly basis, core inflation accelerated by 0.4%, surpassing both expectations and January’s 0.3% increase.
Gold prices surged to a new record high on Friday, driven by uncertainty surrounding US trade policy and an uptick in the Federal Reserve's (Fed) preferred inflation measure. Traders increasingly anticipate two Fed rate cuts in 2025, reinforcing bullish sentiment for the precious metal.
San Francisco Fed President Mary Daly reiterated her outlook for two rate cuts in 2025, emphasizing that inflation remains a top priority. Despite recent progress, she noted that inflationary pressures remain stubborn, requiring continued monitoring.
Market sentiment remains cautious ahead of April 2, which US President Donald Trump has dubbed “Liberation Day” following his executive order imposing a 25% tariff on all imported automobiles. The move has sparked global concern, with Canada and the European Union preparing potential retaliatory measures.
Oil prices fell on Friday as concerns over U.S. tariff wars fuelled fears of a global economic slowdown. However, crude benchmarks posted their third consecutive weekly gains as geopolitical tensions escalated, with Washington intensifying pressure on OPEC members Venezuela and Iran.
Midweek data from the U.S. Energy Information Administration (EIA) showed a significant decline in crude inventories.
The oil market is adjusting global supply expectations amid U.S. sanctions against Venezuela and Iran. Trump has vowed to reduce Iran’s oil exports to zero, with four rounds of sanctions already imposed since his return to office.
Meanwhile, the OPEC+ alliance, which includes OPEC members and allies led by Russia, is set to begin its scheduled monthly production increases in April.
U.S. main indices tumbled sharply on Friday, with technology heavyweights Amazon and Microsoft leading the declines, as fresh economic data heightened concerns about sluggish growth and persistent inflation. Market jitters intensified as the Trump administration prepared to implement additional tariffs, fueling fears of rising costs and prolonged economic uncertainty.
Economic indicators released on Friday painted a mixed picture. While U.S. consumer spending rebounded in February, the increase was weaker than expected. At the same time, a key inflation measure recorded its sharpest rise in over a year. Adding to investors’ worries, the University of Michigan’s consumer sentiment survey revealed that one-year inflation expectations had surged to their highest level in nearly two-and-a-half years, reinforcing fears that tariffs could further drive-up prices.
Looking ahead, investor attention now turns to Trump’s next wave of tariffs, scheduled for announcement on April 2. While previous rounds followed a largely reciprocal pattern, Trump has hinted that the upcoming measures may introduce a new, more complex trade policy approach.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
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