US economic data rebounded and tariff policy loosened, the US dollar hit a two-week high, gold and crude oil trends diverge

As data showed that U.S. business activity rebounded in March and reported that U.S. President Trump will show some flexibility in the upcoming tariffs, the dollar rose on Monday, rising to weeks' highs against the euro and the yen.

S&PGlobal released the initial U.S. avatradescn.comprehensive purchasing managers index (PMI) value for March released by S&P Global rose to 53.5 from 51.6 in February. A PMI above 50 indicates private sector expansion. The growth of this PMI mainly avatradescn.comes from the service industry, partly because the temperature picks up as spring avatradescn.comes.

ForexLive chief foreign exchange analyst Adam Button said: "Overall, the service industry is more important to the U.S. economy, so this is good news for the market." Bloomberg and the Wall Street Journal reported that the Trump administration may exclude some specific industries from the reciprocal tariffs implemented on April 2, which will drive the dollar to strengthen.

U.S. President Trump said he could reduce the reciprocal tariffs planned to be imposed on U.S. trading partners next month, and some countries may receive exemptions, according to the Wall Street Journal.

Trump told reporters in the Oval Office on Monday: "I may give a green light to many countries." He said the magnitude of the reciprocal tariffs may not reach the level he had previously promised to be consistent with the tax rates other countries imposed on U.S. goods. "The market was initially shocked by the scope and scale of tariffs, but recently began to look at it with a more cautious attitude." Karl Schamotta, chief market strategist at Corpay, said: "The market will be less concerned about whether the upcoming U.S. tariffs will be lower than previous concerns," said Karl Schamotta, chief market strategist at Corpay.The degree of optimism is cautiously optimistic, which is affecting the foreign exchange market. ”

The market has been expected this year for the Trump administration to quickly implement policies that are beneficial to economic growth, but these optimism has gradually turned into concerns about the impact of trade tariffs, causing pressure on the dollar. Traders are worried that tariff measures could push up inflation and drag down economic growth in the near term.

Asian Markets

Bank of Japan Governor Kazuo Ueda told parliament today that if the basic inflation rate is considered close to its 2% target, the central government said The Bank is still avatradescn.committed to raising interest rates.

He stressed that the Bank of Japan's targets remain entirely focused on price stability and that its policy policy "will not be disturbed by the Bank of Japan's financial considerations." Ueda's avatradescn.comments came as concerns about the Bank of Japan's balance sheet in light of interest rate hikes and stock market fluctuations.

The Bank of Japan estimated in December that if the short-term borrowing costs rose to 2%, its losses could be as high as 2 trillion yen.

In addition, Ueda noted that the Nikkei 225 decline of 1,000 points would result in a valuation loss of its ETF held by about 1.8 trillion yen.

While these data highlight the scale of financial risks, Ueda's insistence on prioritizing price stability shows that the Bank of Japan is ready to resist market volatility in order to fulfill its monetary policy mission.

European Market

UK March PMI data, with the service industry index rising from 51.0 to 53.2, hitting seven Monthly high. The PMI avatradescn.composite index also rose from 50.5 to 52.0, indicating moderate economic expansion. However, a sharp deterioration in manufacturing has cast a shadow over the situation, which fell from 46.9 to 44.6, the lowest level in 18 months. Chris Williamson, chief business economist at S&P Global Market Intelligence, warned not to be overly optimistic, noting that “a good PMI does not mean a recovery.”

Data shows that the economy has hardly expanded, with GDP growth of about 0.1% this quarter. Employment continues to decline as businesses remain cautious about rising costs and uncertain economic outlooks, and business confidence remains near the two-year lows in January.

Looking forward, the challenges seem to be getting bigger and bigger. Starting with Apri, businesses are preparing for higher national insurance contributions. In addition, the announcement of US tariff policies on April 2 is expected to add another uncertainty.

Bank of England Governor Andrew Bailey urged strengthening of international cooperation to address growing tensions in the global trade system. In a speech overnight, he pointed to the damage caused by U.S. President Donald Trump's trade policy, stressing that solving these challenges requires "multilateral setting, not bilateral setting of tariffs."

Bailey also pointed in a more optimistic toneOut, artificial intelligence is a transformative force in the UK and global economies. avatradescn.comparing artificial intelligence with electricity from the early 20th century, he said that over time, the technology could meaningfully increase growth and per capita income. He called for policy support to promote the development of artificial intelligence as the "most likely universal technology" that can drive widespread economic gains in the avatradescn.coming years.

Jose Luis Escriva, a member of the ECB Management avatradescn.committee of Spain, stressed in an overnight speech that “the downside space for growth risks is greater than the upside space. While he acknowledged that supportive fiscal policy may provide some boost in the near term, he stressed that broader risks – especially downside risks – are dominating the economic outlook.

Escriva paints a grim picture of the current global context , describing it as “extremely uncertain.” He noted that today’s uncertainty global index levels are at the highest level on record, surpassing the peak of the Covid-19 pandemic, the Ukrainian war, the 9/11 attacks and even the major financial crisis.

While the worst, destructive situation has not yet occurred, Escriva stressed that if the situation changes, the ECB must be “more ready than ever” to modify its forecasts and related actions”.

The eurozone March PMI data provides new signs of economic stabilization, with the avatradescn.composite index rising to a seven-month high of 50.4, supported by a significant rebound in manufacturing. The manufacturing purchasing managers index rose from 47.6 to 48.7, the highest level in 26 months. Manufacturing output exceeded 50.7, hitting a 34-month high. The service industry purchasing managers index fell slightly from 50.6 to 50.4, but is still in the growth area.

Cyrus dela Rubia of Hamburg avatradescn.commercial Bank pointed out that the "temporary import boom related to tariffs" could drive up manufacturing data. But he also expressed optimism that as Europe's investment in defense and infrastructure drives, "the hope for a more lasting recovery seems to be well-founded".

For the ECB, it is encouraging that price pressures in the service industry are easing, and input costs and output prices are slowing down. In manufacturing, price pressures remain moderate with the help of lower energy costs.

However, the risk remains. Potential retaliatory tariffs from the United States, trade tensions with China and rising food prices caused by extreme weather events are sources of uncertainty that could cast a shadow on the outlook and “make some ECB members hesitate about overly aggressive rate cuts.”

The eurozone March PMI data provides new signs of economic stabilization, with the avatradescn.composite index rising to a seven-month high of 50.4, supported by a significant rebound in manufacturing. Manufacturing Purchasing Managers Index rose from 47.6 to 48.7 for 26 monthsThe highest level since. Manufacturing output exceeded 50.7, hitting a 34-month high. The service industry purchasing managers index fell slightly from 50.6 to 50.4, but is still in the growth area.

Cyrus dela Rubia of Hamburg avatradescn.commercial Bank pointed out that the "temporary import boom related to tariffs" could drive up manufacturing data. But he also expressed optimism that as Europe's investment in defense and infrastructure drives, "the hope for a more lasting recovery seems to be well-founded".

For the ECB, it is encouraging that price pressures in the service industry are easing, and input costs and output prices are slowing down. In manufacturing, price pressures remain moderate with the help of lower energy costs.

However, the risk remains. Potential retaliatory tariffs from the United States, trade tensions with China and rising food prices caused by extreme weather events are sources of uncertainty that could cast a shadow on the outlook and “make some ECB members hesitate about overly aggressive rate cuts.”

Piero Cipollone, an executive avatradescn.committee member of the ECB, expressed a dovish tone in an interview with Expansión, suggesting that recent developments have strengthened the justification for further rate cuts.

Cipollone pointed out that at the March meeting, the ECB's forecast had already shown that inflation would converge to the 2% target by early 2026 - even under the interest rate path where markets expected a rate cut below 2%.

He added that since then, “not only has this claim been confirmed, but key issues arise, strengthening the argument for continuing to lower interest rates”.

Cipollone pointed out that energy price pressure has begun to reverse. Meanwhile, the appreciation of the euro and higher real interest rates are jointly cooling price growth.

If the U.S. imposes tariffs on European goods a reality, it will "hare a negative impact on demand", which will "further strengthen the decline in inflationavatradescn.comtrends." Similarly, the escalating U.S.-China trade conflict could push Chinese goods to Europe, exacerbating price suppression across the EU.

It is worth noting that Cipollone said inflation may reach its target earlier than the ECB's latest forecast.

U.S. Market

Atlanta Fed Chairman Raphael Bostic said in an interview with Bloomberg that he now expects to cut interest rates only once by the end of the year, lower than his previous two cuts.

Bostic explained that the shift was due to his belief that inflation would be "very bumpy and not rushing."'' As inflation is unlikely to return to its target level by 2027, he believes the path to neutral must also be delayed.

Bostic also expressed concerns about the impact of rising tariffs on inflation. While these measures are often thought to lead to a one-time price increase, Bostic said the current environment may vary.

In his opinion, businesses and consumers may already have a higher tolerance for post-pandemic high inflation, which makes price increases more affordable It can continue. He noted that many business leaders are now confident that they will “completely pass on” higher costs to customers without worrying about losing market share.

U.S. economic activity accelerated at the end of the first quarter driven by a strong rebound in the service industry. The service industry Purchasing managers index soared from 51.0 to 54.3 in March, and the avatradescn.comprehensive Purchasing managers index rose from 51.6 to 53.5. However, the situation is not generally optimistic, with the manufacturing Purchasing managers index falling from 52.7 to a contraction zone of 49.8. Chris Williamson, chief business economist, noted that data showed an annualized growth rate of 1.9% in March, but only 1.5% in the quarter, slowing avatradescn.compared with the fourth quarter of 2024.

Williamson added that recent risks also appear to be "downward". The rebound in most services may prove short-lived. The decline in manufacturing highlights the weakening of the benefits of early “first tariffs”. Business confidence has fallen to its lowest level in the past three years In one, people are anxious about the consequences of the Trump administration's "federal cuts in spending and tariffs."

Tariff-related inflation pressures are beginning to emerge. Input costs are now rising at the fastest pace in nearly two years. In turn, manufacturers are increasingly raising prices to protect profit margins. However, service industry inflation remains relatively moderate due to weak demand and avatradescn.competitive pricing.

The above is about "[Ava Aihua Official Website]: The recovery of US economic data and loose tariff policies have led to a new high for two weeks The entire content of "Gold and Crude Oil Trend Differentiation" was carefully avatradescn.compiled and edited by the editor of Aihua Avatrade Forex. I hope it will be helpful to your trading! Thank you for your support!

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