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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Foreign Exchange Market avatradescn.comment]: Trump says reciprocal tariffs will "slam to all countries"! The yields of US dollar and US bonds have risen." Hope it will be helpful to you! The original content is as follows:
Bootted by the unexpected rise in U.S. durable wealth orders, the U.S. dollar index strengthened slightly on Wednesday, and the U.S. dollar rose to a three-week high against the euro.
U.S. President Trump said on Wednesday local time that the United States will impose a 25% tariff on imported foreign cars. Traders worry that the trade tariffs could hit U.S. economic growth and even re-inflation.
Steve Englander, head of global G10 foreign exchange research and North American macro strategy at Standard Chartered Bank, said: "Everyone in the market is trying to figure out how tariff policies will develop."
Before the tariff announcement, the euro weakened, closing down 0.33% against the US dollar on Wednesday to 1.0752, a six-day decline.
EU Trade avatradescn.commissioner Maros Sefcovic met with senior trade officials of the Trump administration on Tuesday to try to avoid the U.S. imposing high tariffs on EU goods, but the results remain unclear.
avatradescn.comBank of America said its proprietary fund flow data showed that the euro-selling and dollar-buying behavior from official departments (including sovereign wealth funds and central banks) accelerated since last week.
The US dollar/yen closed up 0.49% on Wednesday at 150.57. Bank of Japan Governor Kazuo Ueda said on Wednesday that the central bank must raise interest rates if food prices continue to rise, but he also warned that Japan's core inflation is still below its annual target of 2%.
The GBP/USD closed down 0.41% on Wednesday at 1.2887. The pound fell to a two-week low on Wednesday as inflation cooled and after British Chancellor Reeves released its latest fiscal report.
Asian Market
Japanese Chief Cabinet Secretary Lin Fangzheng said on Thursday that they "renewed the United States to exempt Japan's automobile tariffs."
European market
UK CPI slowed from 3.0% year-on-year to 2.8% year-on-year, lower than expected 2.9%. The core CPI (excluding energy, food, alcohol and tobacco) fell from 3.7% year-on-year to 3.5%, lower than expected 3.6%.
The annual rate of CPI products slowed from 1.0% to 0.8%, while the annual rate of CPI services remained unchanged at 5.0%.
Moon-month calculation, CPI rose by 0.4% month-on-month.
Francois Villeroy de Galhau, a member of the ECB Management avatradescn.committee of France, hinted that "there is still room for further easing", although he emphasized that the speed and amplitude are still uncertain.
In an interview with the Frankfurt Greeting, Villeroy admitted that considering the European summer from June to September, the current market expectations of the ECB summer interest rate at around 2% represent a "possible situation".
He also talked about the recent tightening of financial conditions, noting that the rise in long-term bond yields caused by Germany's large-scale defense and infrastructure spending plans must be included in the ECB's monetary policy assessment.
The surge in spending aims to counter the perception of the U.S.’s regression in global leadership has sparked concerns about its inflationary impact. However, Villeroy downplayed these risks, believing that weak domestic demand in Europe could offset inflationary pressures from increased public spending.
He added that if such fiscal spending is avatradescn.combined with expanding industrial supply, the impact of inflation could be limited.
Fabio Panetta, a member of the ECB's governing avatradescn.committee, urged the central bank to turn its attention to inflation forecasts rather than trying to anchor policy decisions to the elusive "neutral interest rate" or R-star concept.
In a letter to the Financial Times, Panetta believes that neutral interest rates are an invisible goal and can only be estimated using “uncertainty” models and surveys, especially in today’s turbulent environment.
Paneta warned that the ECB should not be "obsessed with" marking its position as a restrictive position based on R-star's estimates. Instead, he stressed that the ECB's efforts should continue to be firmly rooted in evaluating inflation data and determining whether monetary policy has been properly calibrated to sustainably return inflation to the 2% target.
U.S. Market
Bank of Canada's review summary on March 12 showed that the decision to lower policy interest rates by 25 basis points to 2.75% was mainly due to "tax threats and uncertainties"”.
The governing avatradescn.committee members acknowledged that under normal circumstances it was appropriate to keep the tax rate at 3%. However, the impact of steel and aluminum tariffs, additional tariff threats, and unpredictable stance of the U.S. government have begun to have a significant impact on business and consumer decision-making. This “significantly undermines the near-term prospects.”
Looking forward, the Bank of Canada highlighted the avatradescn.complexity of the situation and the liquidity of trade tensions. “It is inappropriate to provide guidance on the future path of policy rates,” the minutes noted. /p>
St. Louis Fed Chairman Alberto Musalem warned that while the initial impact of import tariffs may be short-lived, its broader inflationary impact may persist. He stressed that there are concerns that potential inflation could be affected more lastingly than expected, and if so, the Fed may have to consider a tighter policy stance.
While this is not his baseline scenario, Mousalem stressed that the Fed must be vigilant about the second round of the tariff impact .
He noted that if inflation remains above the 2% target and the economy remains strong, the current monetary stance of “moderately restricted” needs to be maintained for a longer time.
More importantly, “if the labor market remains resilient and the second round of the tariffs becomes apparent, or if medium- and long-term inflation expectations start to increase real inflation or its sustainability, then moderate restrictive policies will be suitable for longer, or stricter policies may need to be considered,” he said.
U.S. Durables in February New orders increased by 0.9% month-on-month to US$289.3B, far better than expected to decline -0.7%.
Excluding transportation orders increased by 0.7% month-on-month to US$190.9B, higher than expected 0.4%. Previous defense orders increased by 0.8% month-on-month to US$271.3B.
Transportation equipment led the rise, up 1.5% month-on-month to US$98.3B.
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