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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Foreign Exchange]: Trump builds "U.S. barriers"! Under the unified tariff strategy, the US index faces a key resistance test." Hope it will be helpful to you! The original content is as follows:
Asian market market review
On Wednesday, the US dollar index continued to rise after people familiar with the matter said that Trump was preparing to announce car tariffs as early as local time (it has now announced a 25% tariff on all imported cars). 104.35
Trump announced a 25% tariff on all imported cars, saying that the reciprocal tariff plan will be "loose".
People familiar with the matter: Trump will accelerate the collection of copper tariffs and implement them as soon as possible or within a few weeks.
U.S. President Trump: There are no exceptions to tariffs on April 2.
Canadian Prime Minister Carney: Ottawa will soon respond to the U.S. tariff statement and may impose retaliatory tariffs.
EU: Sorry about the U.S.'s car tariffs are imposed, and will evaluate the move and other U.S. measures in the aihuaforex.coming days, seeking to resolve the issue through negotiations; senior EU officials expect Trump's tariffs to be about 20% on April 2.
Federal Mousalem: Given the continued economic growth, there is no need to rush to cut interest rates, tariffs may lead to continued inflation.
Gulsby: The U.S. bond market begins to expect higher inflation levels, which will be a "major red flag."
Kashkali: The Fed should remain unchanged for a long time in the face of uncertainty of policies. We have made great progress in reducing inflation, but there are still more workDo it. The job market remains strong, and the biggest challenge is getting the job done.
U.S. Treasury Secretary Besent: It is possible to sign an economic agreement with Ukraine next week.
U.S. Congressional Budget Office: If the debt ceiling is not raised, the government may face the risk of default as early as August.
Kremlin: President Putin's order to suspend the energy strike remains in effect and is being implemented by the Russian armed forces.
UK Spring Budget Statement: Real GDP growth rate in 2025 is expected to be 1.0%, lower than the previous forecast of 2.0%; CPI is expected to be 3.2%, higher than the forecast of 2.6% in October last year.
Summary of institutional views
JP Morgan Chase: Does the US dollar risk-averse halo fade? Tense relations between easing but resilient macro data and weak market sentiment continue to dominate, and the market is currently waiting for further development of the Trump administration's trade policy. The April 2 deadline should at least provide some clear clues to the economic outlook of Canada and Mexico, although we estimate that the average tariff rate in the United States has risen by about 5%, and will rise further in the future, and uncertainty may remain high. We are cautious about risky assets until April 2, and there is a lot of room for underperforming U.S. assets, as uncertainty in U.S. trade policy and the risk of U.S. recession is lingering. The loose space for the U.S. recession is far beyond the potential recovery space for a long-term rise, and the patient AFC reiterated its asymmetric bias.
As a result of weak macroeconomic situation in the United States, sharp changes in the fiscal situation in the euro zone and weakening U.S.-European tariff threats, our outlook for the euro-dollar against the dollar has turned bullish, and we continue to hold long positions in the euro-dollar against the dollar. The target price of Europe and the United States in the second quarter was 1.11, 1.12 in the third quarter, and 1.14 in the fourth quarter. We believe that the possibility of a U.S. recession is higher relative to general expectations, which requires further increase in risk premiums and continue to hold long positions in gold. In the context of a U.S. recession, we believe that the typical U.S. dollar flow to high-quality assets may be partially offset by poor performance in financing currencies such as the euro and the yen. As a means of hedging against more aggressive tariff results, we tend to short the Canadian dollar against the Japanese yen or short the US dollar against the Japanese yen.
Deutsche Bank: If the US economy weakens, the yen may be hit.
aihuaforex.commerzbank foreign exchange analyst Volkmar Ball said in a report that if the US economy weakens, the yen may be hit because it may have a negative impact on Japan's current account. He pointed out that Japan's current account is highly dependent on the U.S. economic development. During the 12-month period from 2021 to the end of September 2024, Japan oftenThe increase in account surplus was driven entirely by initial revenue growth from the United States.
JP Morgan: The success or failure of the United States and Japan next week may be...
Many Bank of Japan officials have made speeches, including the new Bank of Japan review aihuaforex.committee member Junko Osuke, but as usual, nothing worth reporting. The overnight reversal of the U.S. and Japan trends just show the difficulties we are experiencing now, namely, the decline in confidence, while the market is increasingly driven by capital at the end of the quarter. Currently we maintain the core short positions of the United States and Japan, with the expected resistance at 151-151.3, while the 50-day and 200-day moving averages are at 151.54 and 151.705 respectively. In addition, the cloud belts between the United States and Japan are also declining, and are expected to be at the 151 mark next week, when the success or failure of the yen may be in this way.
Goldman Sachs: High inflation raises the threshold for the Federal Reserve's interest rate cut. Economic indicators and inflation expectations become key variables.
Goldman Sachs economists wrote that high inflation and high inflation expectations based on the survey have set higher thresholds for the Fed's possible interest rate cut measures this year. They noted that the survey data became somewhat vague due to the political tendencies of respondents, but these data still cannot be ignored. They added that deteriorating economic indicators still have the potential to prompt the Fed to cut interest rates. They said Fed officials would feel at ease if “market-based inflation aihuaforex.compensation shows that inflation upside this year will not last until after 2025.” Furthermore, a weaker economy should cause inflation to drop slightly in the aihuaforex.coming years. Data from the Chicago Mercantile Exchange (CME) show that the futures market has differences over whether it will cut interest rates twice or three times this year.
Rabobank: Three scenarios of the impact of tariffs on the United States and Canada
Under Trump's leadership, US economic policies have turned to economic governance strategies. This means understanding the new "macro strategy" of the United States and focusing on national security issues. Tariffs are not the only economic tool in the national governance toolbox, but markets have always put tariffs first, even if they don’t see the big picture they target. Tensions between Trump and former Canadian Prime Minister Trudeau are obvious, while current Canadian Prime Minister Carney is in a belligerent state as he wins the federal election in April, but we think whoever wins will change his strategy during his term.
We believe that metal tariffs may continue, but the tariff ranges for steel, aluminum and copper may be expected to weaken. We insist that the U.S. is unlikely to continue to impose a 25% tariff on Canada and Mexico, as the renegotiation of the US-Mexico-Canada Agreement (USMCA) has begun informally. Importantly, we believe that Trump is trying to create “U.S. barriers” through unified external tariffs. Accepting or rejecting this method has a huge impact on ink addition.
If our basic forecast aihuaforex.comes true (i.e., the United States will not impose a aihuaforex.comprehensive tariff of 25% on Canadian goods), the United States and Canada will reach 1.48 in six months and fall back to 1.46 by the end of 2025. But if the 25% tariff is implemented, the United States and Canada mayFurther up to 1.53. In the unlikely scenario of permanent cancellation of all relevant taxes, the United States and Canada are expected to fall to around 1.41.
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