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【XM Group】: The market is keeping a close eye on the new tariff policy, investment banks warn of "expected impact" and US currency is waiting to break the situation
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Hello everyone, today XM Foreign Exchange will bring you "[XM Group]: The market keeps its eye on the new tariff policy, and investment banks warn that "exceeding expectations" American currency is waiting to break the deadlock." Hope it will be helpful to you! The original content is as follows:
Asian Market Review
On Monday, the US dollar is quoted at 104.18 due to uncertainty in US tariffs.
Iranian media: The Iranian Revolutionary Guard seized two foreign tankers carrying more than 3 million liters of smuggled diesel.
According to Iran's Tasnim News Agency: Iran summoned the Swiss ambassador representing the interests of the United States and issued a warning about Trump's threat.
Kremlin: Russian President Putin is still willing to keep in touch with US President Trump.
Trump will announce reciprocal tariffs at the White House Rose Garden on April 2, and details may be announced on Wednesday morning Beijing time. U.S. officials said the plan would not have any exemptions (including farmers) and would impose industry tariffs at another time.
The U.S. auto manufacturing industry seeks to exclude some auto parts from tariffs.
U.S. Energy Information Administration (EIA): U.S. crude oil production fell to its lowest level since February 2024 in January.
Federal Williams: There is no stagflation in the current economy, and it depends on dataTo adjust the policy, there is high uncertainty and long-term inflation expectations are stable. Barkin: Rate cuts require confidence in the decline in inflation. It is not the time to predict how many times will be cut this year. Worry about the impact of tariffs on inflation and employment.
The RBA kept the cash rate unchanged at an expected 4.1% on Tuesday, saying it was still cautious about the outlook, but did not explicitly mention being cautious about another rate cut. The RBA said the policy is ready to deal with the development of the international situation and that U.S. tariffs are expected to drag down global economic growth.
Summary of institutional views
Citi: April 2 is not the end of the US dollar, and it continues to pass...Short the euro
Whether the VAT is included in the reciprocal tariff will determine whether the reciprocal tariff is hawkish or dove xmaccount.compared to market expectations. In our basic scenario (weighted average tariff rate increases by 10-15%), there is ±0.5% room for fluctuation across the asset market. While overall tariffs have been high so far this year, the market impact is weakening, indicating that the final impact may be reduced if the tariffs meet expectations.
In our most hawkish situation (with a bonus of >15%), the U.S. dollar index is expected to rise by 1%. However, we believe that April 2 may not be a clear event that the market hopes for, and uncertainty about implementation time may limit the gains triggered by the US dollar based solely on the implementation of tariff announcements. We continue to short the EUR against the US dollar through the 1.07/1.05 bearish spread.
Technically, the US dollar index's main support is at 103.37, followed by 102.48-102.52, while the resistance is at 104.94-104.97. The euro-USD support is 1.0728, followed by 1.0630, and the resistance is 1.0937-1.10. The US-Japan support level was seen at 146.54-146.95, and the resistance level was seen at 151.62-151.83.
Westpac: The number of new jobs in the United States will slow down to...
In the past six months, the average number of non-farm employment was 191,000, and the average in the past year was 162,000. Overall, this is consistent with a stable unemployment rate. However, during last month’s non-farm survey, the business survey continued to point to downside risks. Now as the impact of tariffs and DOGE layoffs gradually emerges, consumers are starting to feel worried. We expect the number of new jobs in the United States to slow down to 14https://xmaccount.com.5,000. There are short-term downside risks for public sector layoffs, but as most layoffs face challenges, the final impact could appear slowly and gently for months.
Daily Market Observation: Before "Tariff Day", the foreign exchange market is not numb, but is ready to go: these two major trading opportunities are about to explode!
The foreign exchange market is currently on the stand-by and watch, waiting for one of the biggest macro catalysts this quarter: President Trump will announce his long-term "peer-to-peer tariff" policy on April 2. Before this, traders chose defensive strategies—not because of lack of confidence, but because the tariff system itself is still full of uncertainty.
Although the United States has announced that it will impose a global tariff of 25% on all automobile and parts imports starting from April 3, the price trend of the G10 currency remains flat. Except for the Swedish Krona (SEK), all G10 currencies have less than 1% volatility against the US dollar. This is not a numbness of the market, but a hedge paralysis caused by xmaccount.complexity.
The Trump administration sets a xmaccount.complex set of tariff assessment standards, including tariff differences, sales taxes, non-tariff barriers, exchange rate adjustments, and various factors identified as "unfair trade practices." But it is not clear how these factors are weighted and eventually converted into specific tariff measures. Before the announcement was officially released, the market had no clue about pricing - and what the market hated the most was the guessing game.
However, there are several potential trading points to be prepared in advance. Trump's tariff list covers 88% of the total U.S. xmaccount.commodity trade volume, 21 countries, 9 of which are from Asia. The foreign exchange market in this region is expected to face the most severe risk of repricing after the tariff announcement is released. If the UK is unexpectedly selected, it will also attract market attention. The UK's trade surplus with the United States in 2024 was only $12 billion, and the strengthening of the pound since Trump was elected in November last year shows that the market still believes that the UK is expected to escape the biggest shock.
Dutch International Group: At least the Australian dollar needs to reach this level before it can consider bottoming out?
We expect the RBA to keep interest rates unchanged tomorrow morning, consistent with market consensus and pricing. Australia's inflation was lower than expected in February, but the average CPI of 2.7% was still too high and not enough to cut interest rates continuously. It is worth noting that inflation rebounded after the interest rate cut in February, causing the RBA hawks to readjust their policy tone. RBA Chairman Brock may want to avoid repeating the same mistake, at least another encouraging inflation data is needed to relax policy again. He is expected to release cautious information, focusing on the uncertainty brought about by tariffs.
As Asian currencies pressures intensify, the Australian dollar and New Zealand dollar became the biggest losers in the G10 currency in late March. Given our relatively pessimistic view of the U.S. trade policy to be launched in April, we don’t think there will be much relief in the near term. We still set our Australian dollar target at 0.62 before we can consider bottoming out.
Goldman Sachs: The market underestimates the "eye of the storm" of tariffs, which may easily lead to such results
The market's attention to the tariff plan on April 2 has increased sharply. Observations have found that the market is currently integrating expectations of an overall 10% tariff approaching (but may be slightly lower than) expectations. However, the market place less emphasis on more aggressive tariff expectations, which may make the mostThe end result is prone to negative impact. Over time, the market's reaction to tariff news seems to have caused the dollar to rise less room, the US stock market will fall more room and the yield will fall. While it is difficult to determine how long the above reaction shift will last, we believe this reflects largely a reflection of the growing concerns about the impact of tariff uncertainty on U.S. economic growth and their signals about government tolerance for weaker growth outcomes. Both are more like conventional “shocks” on U.S. growth expectations.
In addition, we believe that the market is still vulnerable to negative impacts. In this scenario, the market performance may be a decline in stock markets, an increase in volatility, and a possible rise in gold. We think interest rates (at least the rate outside the front end of the curve) are more likely to fall. The dollar should strengthen, but it depends more on how the market handles the new shock. We believe non-U.S. assets, especially European assets, may be more susceptible to a new round of tariff proposals than before, and believe that under more radical reciprocal tariffs, short-term yields in Europe may decline.
While we have a more negative view of tariffs than market pricing, there are clear mitigation paths if the scope of tariffs is narrowed or the implementation timeline brings hope for renegotiation. We believe that the U.S. and Japanese stock markets, as well as the rise in oil, are attractive ways to get these more benign results. We continue to believe that it is reasonable to include some positions in the portfolio that benefit from mitigation in growth and increased downside risks.
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