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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Official Website]: The US dollar weakens, recession is worried about European currencies rebound." Hope it will be helpful to you! The original content is as follows:
Asian market market review
On Wednesday, the US economic outlook was hit by the impact of Trump's announcement of increasing global reciprocity tariffs, and the US dollar index closed down 0.49%. As of now, the US dollar is quoted at 102.78.
Trump signed an executive order to establish a "minimum benchmark tariff" of 10% for all countries, and will impose reciprocal tariffs, of which the EU's reciprocal tariffs reach 20%, Japan's 24%, Vietnam's 46%, and South Korea's 25%. The exemption of goods tariffs xm-links.compliant with the US-Mexico-Canada Agreement will continue, and non-compliant tariffs will remain at 25%.
The US Treasury Secretary calls on all countries to never retaliate.
The effective date of the benchmark tariff is April 5, and the effective date of the reciprocal tariff is 9 days. Another 25% of the automobile tariff will xm-links.come into effect on the 3rd, and the automobile parts tariff will xm-links.come into effect on May 3rd.
Gold bars, copper, pharmaceuticals, semiconductors and wood products are not subject to "reciprocal tariffs".
Many countries have expressed their countermeasures to U.S. tariffs.
Market News: European xm-links.commission President von der Leyen will issue a statement on US tariffs on Thursday morning local time.
Canadian Prime Minister Carney: We will take countermeasures to xm-links.combat these US tariffs, and Canada will respond to US tariffs on Thursday.
Thailand Ministry of xm-links.commerce: Plans to cut tariffs on US products.
South Korea's Ministry of Planning and Finance: It will prepare a response strategy to minimize the negative impact of US tariffs.
The U.S. Treasury Secretary said that the Ukrainian delegation may arrive in the United States as early as this week.
It is reported that Trump is seriously considering indirect nuclear negotiations with Iran.
Summary of institutional views
Ruisui Securities: Tariffs will remain the source of economic headwinds Asian currencies may continue to be under pressure
VishnuVarathan, head of macro research at Ruisui Securities Asia (except Japan), said that U.S. reciprocal tariffs may continue to be a source of economic headwinds. These tariffs could also “inadvertently intensify, intensifying the vulnerability to adverse demand shocks,” Varathan said. “Asia has been hit particularly hard, with Cambodia, Vietnam, Thailand and Indonesia being particularly prominent.” In addition, South Korea, Japan, India and the EU were not spared, while the UK, Australia and Singapore were least affected. Varathan added that therefore, the pressure on Asian currencies may continue, except for Japan.
Scotiabank's prospects for March non-agricultural: The market may over-interpret data?
Non-agricultural population: 175,000; unemployment rate: 4.0%; hourly wage monthly rate: 0.3%
We believe that the new non-agricultural population in the United States in March was 175,000, and the unemployment rate may drop slightly to 4%. This prediction is based on multiple factors: there is uncertainty in the weather effect, but it has a positive impact on the household survey employment indicators. According to BLS statistics, the proportion of workers who were "unable to work" due to bad weather in January to February this year was an abnormally high, while changes in non-farm employment in the San Francisco Fed in February after weather-adjusted weather were basically neutral. xm-links.combining the two indicators and speculations, the boosting effect of weather on household survey employment may be stronger than that of non-agricultural statistics.
The number of government employees is expected to decline moderately, but as the full impact of the Ministry of Finance’s spending cuts has not yet emerged, employees who receive xm-links.compensation plans will still be included in the salary list for months under the influence of layoffs in batches. Continued expansion of state and local governments may offset the contraction of federal departments, causing overall government employment to remain flat or record substantial growth. In addition, the effect of resumption of work on strikes may bring a slight boost: the number of strikers during the February investigation week was 19,800, and it has dropped to 5,000 by March. Those who have returned to work who meet the statistical conditions will be re-included in employment data.
As for the impact of tariffs on recruitment confidence, there is a two-way mechanism: in the short term, it may stimulate enterprises to accelerate production to avoid tariffs and promote the increase in temporary employment; but in the long run, investment confidence may be more damaged than recruitment intentions. xm-links.compared with reducing capital self-producing, layoffs are the first choice for enterprises when the economy is downward. If this week's non-agriculturalThe data is unexpectedly strong, and we need to be wary of the market's over-interpretation of it as a worry-free signal of the US economy, which may reflect the risk-averse mentality of xm-links.companies choosing to "rather hire than invest" in a situation of surge in uncertainty.
Bank of the United States looks forward to March non-agricultural employment: the number of new non-agricultural employment may far exceed market expectations, ... with downside risks
Non-agricultural population: 185,000; unemployment rate: 4.1%; hourly wage monthly rate: 0.3%
The number of non-agricultural employment in March is expected to see a strong growth of 185,000, far higher than the market's expectations of 135,000. The strong growth this month was mainly due to the recovery of leisure and hotel employment in January and February caused by cold weather. Affected by DOGE, the employment growth of government departments is expected to be only 10,000. However, given that the number of initial invoices announced last week remains low, the DOGE-led layoffs are not expected to constitute a significant drag on the job market, but they still have certain downside risks. The unemployment rate is expected to remain unchanged at 4.1%, but due to weather disturbances, the average weekly working hours (AWH) is expected to rebound to 34.2 hours, and the monthly hourly wage rate will remain unchanged at 0.3%.
Rabobank: When will the United States and Japan resume their downward trend?
The Bank of Japan continues to maintain a tightening tendency while assessing the impact of tariffs. On the one hand, tariffs will have a destructive impact on the Japanese economy. On the other hand, Japan's inflation data continues to be higher than expected. The Japanese government has tried to negotiate exemptions on steel and aluminum tariffs, but has not achieved significant results at present. However, Japan may still hold good "negotiation chips". In addition to being the largest foreign holder of US Treasury bonds, Japan is also the largest source of foreign direct investment (FDI) in the United States. In addition, more than 90% of Japan's defense imports xm-links.come from the United States. While trade tensions may reinforce the Bank of Japan's not rush to raise interest rates, another strong round of wage agreements and inflation data suggests that the July interest rate meeting remains the focus. We expect the United States and Japan to resume the downward trend in the second half of the year and maintain the forecast of 145 by the end of the year, and there is further downward risk for the forecast.
Deutsche Bank: Powell rarely chose to speak on Non-agricultural Day. How will he show the "art of walking tightropes"?
Feder Chairman Powell will take the stage this Friday after the release of the March non-farm report, which provides him with an opportunity to assess the relationship between the latest data and the March quarterly forecast. While he may avoid xm-links.commenting directly on the tariff announcement on Friday, he may re-emphasize the uncertainty of the unusually high economic outlook and the risks facing the dual mission. In fact, we found that the majority of the drag on economic activity was issued in the first three quarters, and we expect the peak impact of tariffs on quarterly GDP to be concentrated around the third quarter of 2025. It is worth noting that trade policy uncertainty and recent stock market downturns may lead to a consistent weakening of sentiment indicators this week. To be sure, the Fed's dual mission puts it in a very difficult situation.
In tariff resultsIn a milder case, we believe the Fed has room to keep interest rates unchanged this year, consistent with our current benchmark expectations. This is similar to the Fed's March dot chart median forecast, but the inflation rate is slightly higher. However, in the context of more radical tariffs, we see significant risks to the recession. In this case, we expect the Fed to “see through” tariff-driven inflation and focus on the weak labor market as long as inflation expectations are not instable. Finally, if this week’s non-farm data meet expectations, we expect Powell to continue to describe the labor market as “stable” and reiterate policy rates can handle the risks of its dual mission well.
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