Trump's tariffs are spreading big news, gold changes its face

The US dollar was basically flat on Tuesday, with U.S. economic data showing weak manufacturing and labor markets, and the market is paying attention to the tariff policy that the Trump administration will announce on Wednesday.

In terms of economic data on Tuesday, the U.S. manufacturing industry shrank in March, ending two consecutive months of expansion, while factory ex-factory prices hit the highest in nearly three years, and the market is worried that tariffs may push up costs for enterprises and consumers. In addition, the U.S. Department of Labor reported that the number of job openings dropped to 7.568 million in February.

Corpay Chief Market Strategist Karl Schamotta said: "It is obvious that manufacturing is already under the impact of Trump's protectionist policies, and the overall economy may face chain impacts in the next few months."

Schamotta added: "Price sentiment is extremely tense before Trump will announce the 'Liberation Day' tariffs. Due to differences in the outside world on the scope, scale and duration of the tariffs, investors choose to reduce the exposure of the money market and wait for more details."

In this environment, investors regard the yen as a safer safe-haven asset than the dollar, because the U.S. tariff measures may hurt their own economy.

Asian Market

China's Caixin Manufacturing Purchasing Managers Index rose from 50.8 to 51.2 in March, setting a four-month high.

Wang Zhe of CaixinInsight Group said optimistic data showed a stable start this year, indicating a broader industrial sectorSigns of recovery.

However, there are still challenges beneath the surface. The labor market is "still relatively sluggish". In addition, “deflation pressure remains” driven by weak domestic demand and cautious sentiment among market participants.

Japan's manufacturing industry further contracted in March, with the final PMI value falling from 49.0 in February to 48.4, the lowest level in a year.

According to S&PGlobal, output and new orders declined even more, reflecting “soft demand from domestic and international customers”. Employment provides a rare highlight as aihuaforex.companies increase hiring at the fastest pace in three months.

However, confidence remains sluggish, below the long-term average. Cost pressure also continues, with both input costs and sales prices rising sharply, indicating that "inflation pressures throughout the industry are still severe."

A short-term survey in Japan for the first quarter showed that Japan's economic outlook was mixed, and sentiment among large manufacturers fell for the first time in a year. The index fell from 14 to 12, in line with expectations as steel and machinery producers become more cautious amid weak global demand, rising input costs and uncertainty in U.S. tariff policies.

However, the manufacturing outlook index was slightly lowered to 12, surpassing expectations of a sharp drop to 9, indicating that aihuaforex.companies remain cautiously optimistic.

In contrast, Japan's service industry shows extraordinary resilience. The large non-manufacturing index rose from 33 to 35, the highest level since 1991. Nevertheless, the prospective aihuaforex.component remained flat at 28 points, slightly below the expected 29 points.

Capital expenditure plans are also encouraging, with large aihuaforex.companies expecting a 3.1% growth in fiscal 2025, higher than market expectations of 2.9%.

European market

European manufacturing sector showed encouraging signs of recovery in March, with the final value of the manufacturing Purchasing Managers Index rising to 48.6, the highest level in 26 months. The output index broke through the 50 mark to 50.5, the first time it has entered a growth area since March 2023. Although technically still in a contraction state, the overall PMI has been steady for three consecutive months of steady climbs, indicating that the worst of the industry may have passed.

The regional segmentation showed mixed performances, with Greece leading by 55.0, while Italy and Austria remained below 47. Germany and France, the two largest economies in the euro zone, improved significantly to 48.3 (31-month highs) and 48.5 (26-month highs), respectively.

Cyrus dela Rubia, chief economist at Hamburg aihuaforex.commercial Bank, believes some recent gains stem from U.S. aihuaforex.companies loading orders ahead of the looming tariff war, which could mean that some improvements could end in the aihuaforex.coming months.

Nevertheless, there are still signs that structural positive factors are forming. There is growing speculation that Germany's increased fiscal spending - especially defense and infrastructure spending——It may eventually penetrate into the wider euro zone growth. While these benefits are unlikely to be felt before 2026 or later, they offer a potential avenue for sustained recovery.

The overall CPI in the euro zone in March fell slightly from 2.3% to 2.2% year-on-year, in line with expectations. CPI cores (excluding energy, food, alcohol and tobacco) fell from 2.6% year-on-year to 2.4% year-on-year, lower than the forecast 2.5% year-on-year.

In terms of aihuaforex.composition, the service industry remains the main driver, although it slowed from 3.7% to 3.4%. Food, alcohol and tobacco rose slightly from 2.7% to 2.9%. Non-energy industrial products remained stable at 0.6%, while energy further slipped into the deflation zone at -0.7%.

The UK's manufacturing purchasing managers index finally reached 44.9 in March, down from 46.8 in February, the lowest level in 17 months. Data shows that the market is generally weak, with output, new orders and export businesses falling sharply. Business optimism also fell to its lowest point since November 2022.

RobDobson of S&P Global Market Intelligence pointed out that new business inflows suffered one of the biggest drops since the 2020 pandemic lockdown.

Manufacturers are being hit “a number of fronts”: weak domestic demand, rising costs associated with changes in minimum wages and national insurance, and worsening global trade background due to increased geopolitical risks and tariff uncertainty.

Megan Greene, a member of the Bank of England's Monetary Policy aihuaforex.committee, said today that a trade war involving retaliatory tariffs could cause "deflation" to the UK as a whole. Although she cautions that at this stage, early modeling should not be too important.

Green pointed out that exchange rates will become a key channel for transmission of the impact of global trade tensions. She also noted that the role of the US dollar as a world reserve currency may be "slightly weakened" by rising uncertainty, thereby increasing the unpredictability of exchange rate responses, including the GBP/USD.

With domestic inflation expectations, Green insists that they are currently “keep anchored” but acknowledges that upward trends over the past six months are becoming increasingly worrying. Although she clarified that this is not a crisis-level issue at the moment—“no red lights”—this trend deserves attention.

U.S. Market

The US ISM Manufacturing Purchasing Managers Index fell to 49.0 in March, lower than expected 49.9 and lower than 50.3 in February.

New orders fell sharply, from 48.6 to 45.2, the lowest level since May 2023, with production falling 50.7 to 48.3. Employment rates are also under pressure, falling from 47.6 to 44.7, and continuing a 28-month contraction trend over the past 35 months.

Although overall activity is weak, price pressure surges. The price index jumped from 62.4 to 69.4,The highest level since June 2022. The index has climbed more than 21 percentage points over the past six months, indicating increasing cost pressures that could push towards wider inflation in the aihuaforex.coming months — especially in the context of tariff-related supply chain disruptions.

Despite the decline in PMI, ISM notes that the current level is still consistent with a moderate annualized GDP growth rate of 1.9%.

The above content is all about "[Ihua Foreign Exchange Platform]: Trump's tariffs spread big news, gold changes face" is carefully aihuaforex.compiled and edited by the Avatrade Foreign Exchange editor. I hope it will be helpful to your transactions! Thanks for the support!

Only the strong know how to fight; the weak are not qualified to fail, but are born to be conquered. Step up to learn the next article!