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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Foreign Exchange Market Review]: The key data in the United States "exploded", and gold 3021 encounters hawkish trading in the face of". Hope it will be helpful to you! The original content is as follows:
Trades became cautious on Tuesday, and the US dollar index fell slightly as the market remained uncertain about tariffs planned by US President Trump. The day before, market optimism that Trump might remain resilient on tariffs pushed the dollar higher.
MonexUSA forex trader Helen Given said global markets appeared more cautious on Tuesday after Monday's risk-favorable trading.
Trump said on Monday that not all tariffs he threatened to impose will be implemented on April 2, and that some countries may be exempted.
The market is concerned that tariffs will drag down U.S. economic growth and may reignite inflation pressure, putting the dollar under pressure. However, as market concerns about the impact of tariffs have eased, the dollar has stabilized in recent weeks.
S&P Global U.S. PMI data released on Monday showed that the service industry performed better than expected, which to some extent eased market concerns that the U.S. economy could fall into a short-term recession. However, data released on Tuesday showed that the U.S. consumer confidence index fell for the fourth consecutive month and hit a 12-year low.
According to data released by the Consulting Chamber, the consumer confidence index in March fell 7.2 points from the previous month to 92.9, a decline of 4 consecutive months, significantly falling from 202The relatively stable range maintained in the past two years is less than the market expected 94.
ING economist James Knightley said in the report: "American households originally expected Trump to prioritize tax cuts and easing regulation, but now face fiscal tightening and potentially dramatic increase in trade tariffs, which has exacerbated households' concerns about the financial and employment outlook, which may in turn curb consumer spending."
Analysts noted that the dollar may gain support as funds rebalance this week and end of January and the end of the quarter are rebalanced.
Given said: "The biggest liquidity change in the market is a reversal from a trend that was significantly unfavorable to the dollar in the first quarter, with investors starting to cut short positions in the dollar at the end of the month and at the end of the quarter." Minutes of the Bank of Japan's meeting from January 23 to 24 showed that policy makers are becoming increasingly consistent that it would be appropriate to further tighten the policy if the current economic and price outlook remains unchanged.
While the central bank raised its policy rate to 0.5%, members acknowledged that the real rate was still "significantly negative", ensuring that "loose financial conditions are maintained."
However, global uncertainty casts a shadow on the road ahead. While the Bank of Japan kept interest rates stable at its latest meeting last week, it pointed to the growing risk of U.S. tariff escalation.
Nevertheless, Ueda Kazuma Governor stressed that stronger-than-expected wage growth and sustained food price inflation could keep the base price upward pressure, suggesting that the possibility of another rate hike is still high.
European market
Germany's Ifo business prosperity index rose slightly from 85.3 to 86.7 in March. Although the increase was slightly lower than the market expectations of 87.0, the improvement in various industries was broad. The current assessment index rose from 85.0 to 85.7, higher than expected 85.5. The expected index rose from 85.6 to 87.7, but was still below the forecast of 87.9.
Confidence in all sectors has improved. The manufacturing index rose sharply from -21.9 to -16.6. The services sector (from -4.3 to -1.1), trade (from -26.3 to -23.7) and construction sector (from -27.4 to -24.6) all showed minor improvements, indicating a wide but tentative shift in market sentiment.
Ifo president ClemensFuest avatradescn.commented that "German businesses want to recover", and survey director Klaus Wohlrabe expressed the same view, who expects GDP to grow by 0.2% in the first quarter and contract with GDP in the fourth quarter.
U.S. market
The U.S. Consumer Confidence Index fell sharply in March, with the World Federation of Large Enterprises Index falling 7.2 points to 92.9, far below the expected 94.2. The status quo index fell -3.6 points to 134.5.
What is really worrying is the expectationThe index, which plunged nearly 10 points to 65.2, was the lowest level in 12 years and was well below the 80 mark that is usually associated with a recession.
Senior economist Stephanie Guichard, a World Federation of Large Enterprises, noted that consumer confidence has now declined for four consecutive months, beyond the stable range observed since 2022.
The most worrying thing is the sharp decline in revenue expectations, which have been flexible before. Guichard stressed that “concerns about the economy and labor market have begun to spread to consumers’ assessments of their personal status.
Federal Director Adriana Kugler expressed growing concerns about recent inflation behavior. She stressed in her speech today that some inflation subcategories “accelerated again in recent months.” avatradescn.commodity inflation, in particular, had been negative in 2024 but recently turned positive.
She warned that the shift was “unhelpful” because avatradescn.commodity inflation “repeatedly limits total inflation and also affects inflation expectations.”
K ugler added that the survey now shows that consumer inflation expectations are also rising, with a large part of the uncertainty related to ongoing trade policy developments.
Despite these concerns, Kugler reiterated his confidence in the current policy stance, describing it as restrictive policy, and the Fed is “in a good position.”
Atlanta Fed Chairman Raphael Bostic said in an interview with Bloomberg that he now expects to cut rates only once by the end of the year, lower than the two he had previously expected.
Bo Stik explained that the shift was due to his belief that inflation would be “very bumpy and not moving sharply and explicitly towards the 2% target”. As inflation is unlikely to return to its target level by 2027, he believes that 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 be different.
In his opinion, businesses and consumers may have already been more tolerant of high inflation after the pandemic, which makes prices on The rise is more likely to continue. He pointed out that many business leaders are now confident in "completely passing" higher costs to customers without worrying about losing market share.
The above content is all about "[Ihua Forex Market Review]: The key data in the United States "exploded", and gold 3021 encounters hawkish trading in the face of hawks". It was carefully avatradescn.compiled and edited by the Avatrade Forex editor. I hope it will be helpful to your trading! Thanks for your support!
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