The dollar rises, global markets focus on trade policy and economic uncertainty

The U.S. dollar index rose Thursday as the Federal Reserve said the day before that it had no intention of rushing to cut further interest rates this year due to uncertainty in U.S. tariff policies.

The Fed kept interest rates unchanged on Wednesday and expected two 25 basis points cuts this year, the same as forecast three months ago.

Federal Chairman Powell said: "We will not be in a hurry to act." Powell's remarks and the Fed's policy statement highlight the challenges facing policymakers who need to deal with President Trump's plan to impose tariffs on U.S. trading partners and its impact on the economy.

Data released on Thursday showed that the number of initial unemployment claims in the United States rose slightly last week, reflecting that the employment market remained stable in March.

Jayati Bharadwaj, global foreign exchange strategist at TDS curities, said recent U.S. data eased market concerns about a slowdown in the U.S. economy, after which the dollar depreciated as much as 7% against the euro since mid-January.

Asian market

The number of employment in Australia fell sharply in February -52.8k, significantly lower than the market's expected 30k growth. The decline is widespread, with full-time jobs down -35.7k and part-time jobs down -17k.

The unemployment rate is stable at 4.1%, consistent with the forecast. Participation rate fell by -0.4% to 66.8%, indicating that fewer people actively seeking jobs have helped prevent unemployment.Lift. In addition, monthly working hours fell -0.4% month-on-month, reflecting weak labor market conditions.

Australia's Bureau of Statistics blames partly the decline in employment rates on the decline in older workers reentering the labour market. However, the broader trends still indicate the resilience of the job market, with 266k people increasing, or 1.9% aihuaforex.compared to last year. The annual employment growth rate is still close to the average of 2.0% in the 20 years before the pandemic.

European Market

The Bank of England kept the benchmark bank interest rate unchanged at 4.50%, in line with market expectations. The known dove Swati Dhingra again objected and voted for a 25 basis point cut. However, Catherine Mann, who had previously voted to support a 50 basis point cut, changed his stance and supported keeping interest rates unchanged.

The accompanying statement highlights the "gradual and cautious approach" of rate cuts, highlighting that despite some signs of economic weakness, the Bank of England is not in a hurry to relax its policies.

The Bank of England also highlighted growing global uncertainty, particularly around increased trade policy risks and geopolitical tensions. The aihuaforex.committee acknowledges the impact of new U.S. tariffs and some government retaliation measures. In addition, recent fiscal reforms in Germany were noted.

While UK GDP growth is “slightly stronger than expected,” business surveys continue to point to potential weakness in employment intentions and broader economic activity. The Bank of England expects CPI to rise to around 3.75% in the third quarter of 2025 and “retraces thereafter.” But policymakers remain cautious about potential ongoing inflationary pressures.

European Central Bank President Christine Lagarde warned in a speech to the European Parliament aihuaforex.committee that the U.S. tariffs on European imports could have a significant negative impact on the eurozone economy, with growth set to drop by about 0.3% in the first year.

If the EU responds with retaliatory tariffs, the impact may deepen, and the euro zone GDP growth will drop by as much as 0.5%.

While the worst impact will be felt in the first year, Lagarde stressed that this effect will be durable and “has a persistent negative impact on output levels.”

In addition to concerns about growth, in this case, the inflation outlook will also become highly uncertain.

In the short term, EU retaliation measures and weak euro (as US demand for European products decline) may push inflation up about 0.5%.

In the medium term, weak economic activity will suppress price pressures and ultimately offset the initial inflationary impact.

In February, the number of jobs in the UK increased by 21k (0.1% month-on-month). However, median monthly salary growth slowed from 6.0% to 5.0%, strengthening signs of gradual easing of wage pressure. However, the number of applicants surged by 44.2k, well above the expected 7.9k.

The unemployment rate remained unchanged at 4.4% for the three months to January, slightly better than expected by 4.5%. Average revenue, including bonuses, rose 5.8% year-on-year, slightly lower than the 5.9% expectation. Excluding bonuses, wages increased by 5.9% year-on-year, in line with expectations.

The Swiss National Bank generally expects a 25 basis point rate cut, reducing the policy interest rate to 0.25%. The Swiss National Bank pointed out in its statement that low inflation pressures and "inflation downside risks" defended the decision.

The central bank acknowledged that Switzerland's economic outlook has become "quite uncertain", especially as global trade tensions and increased geopolitical risks. The external environment remains the main threat to growth.

New conditional inflation forecasts indicate that inflation will remain within its price stability range, with an average of 0.4% in 2025 and 0.8% in 2026 and 2027. These forecasts assume that policy rates remain at 0.25% throughout the forecast period.

In terms of growth, the Swiss National Bank expects GDP to grow by 1% to 1.5% in 2025, and domestic demand will benefit from rising real wages and a loose monetary environment. However, weak external demand is expected to drag down growth. The Swiss National Bank expects GDP growth to be about 1.5% in 2026.

U.S. Market

Bank of Canada Governor Tiff Macklem issued a harsh warning on the economic consequences of U.S. tariffs, emphasizing that widespread and lasting trade barriers will curb Canadian exports, lower overall output and push up consumer prices.

In an overnight speech, Macklem pointed out that the unpredictability of U.S. tariffs, marked by “continuous policy reversals”, injected significant uncertainty into the prospects of Canadian businesses and families.

Macklem highlights two main areas of concern: what taxes are imposed and how long it takes to be imposed, as well as uncertainty about its economic impact.

The Bank of Canada has observed that businesses are cutting investments and hiring, and many families are becoming more cautious about spending. He warned that if widespread tariffs continue, the result would be “demand reduction, slowing economic growth and rising inflation.”

While monetary policy cannot prevent initial price increases caused by tariffs, Macklem stressed that it must take action to “prevent these initial direct price increases from spreading.”

"We must ensure that higher prices brought by tariffs do not become persistent general inflation," he stressed.

The number of initial unemployment claims in the United States rose by 2k to 223k in the week ended March 15, slightly higher than the expected 222k. The four-week moving average of initial jobless claims rose 750 to 227k.

InterceptAs of the week of March 18, the number of renewed unemployment benefits rose by 33k to 1892k. The four-week moving average of the number of renewed unemployment benefits rose by 6k to 1876k.

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