Trump's tariffs suddenly concessions, and the Federal Reserve suddenly heard "eagle"

The US dollar rose on Wednesday, and US President Trump announced a 90-day suspension of new tariffs on multiple trading partners, driving the dollar to rebound against safe-haven currencies such as the Japanese yen and the Swiss franc.

Earlier on Wednesday, Trump imposed reciprocal tariffs on dozens of countries, and the dollar once weakened.

KlarityFX CEO Amarjit Sahota said: "The market is volatile at the moment, especially the stock market responded enthusiastically to the news." However, he warned: "The real question is why this kind of suspension occurs today? Is this a good idea? I personally think it is not. A 90-day suspension will only create 90-day uncertainty." Sahota added: "This looks like a very poor policy decision, at least in terms of planning and execution. The market currently welcomes this respite rebound, but can this really last? What does this mean for the US dollar?"

U.S. Treasury Secretary Bescent reiterated in an interview with Fox News that the US still maintains a strong US dollar policy.

Asian market

China's consumer inflation rate was in a negative area for the second consecutive month in March, with CPI falling -0.1% year-on-year, lower than the expected 0.1% year-on-year growth. Although the decline is less than -0.7% in February, it still reflects the sluggish demand pressure across the economy.

Food prices were dragged down, down -1.4% year-on-year, while service prices only provided moderate support, up 0.3% year-on-year. Excluding the volatile food and energy prices, the core CPI rose slightly to 0.5% year-on-year from 0.3% before, showing thatA little toughness.

However, as overall inflation remains hovering around zero, signs of consumer caution persist, the broader deflation trend seems to be deeply rooted.

Moon-month calculation, CPI fell by -0.4%, following a month-on-month decline of -0.2% in February, indicating that the momentum of household spending continues to be weak.

At the same time, the producer price index continued to decline for the 30th consecutive month, with PPI falling -2.5% year-on-year, higher than expected -2.3%.

Japan's PPI rose 4.2% year-on-year in March, slightly higher than 4.1% in February and higher than the year-on-year increase expectation of 3.9%. This growth was broadly based, with food prices rising significantly, up 3.1% year-on-year, energy costs rising, and oil and coal prices soaring 8.6% year-on-year.

Despite the rise in domestic producer prices, import costs in the yen fell -2.2% year-on-year in March, continuing the decline of -0.9% in February. However, export prices rose slightly by 0.3% year-on-year, a sharp slowdown from the year-on-year increase of 1.7% in February.

European Market

Francois Villeroy de Galhau, a member of the ECB Management avatradescn.committee of France, warned today that the escalating trade tensions have led to an increase in economic uncertainty, posing a risk to financial stability, especially increasing credit risks to some financial institutions.

While he stressed the resilience of French banks, he noted that leveraged hedge funds could face enormous liquidity pressure.

In an annual letter to President Macron, Villeroy assured that both the Bank of France and the European Central Bank were “fullly mobilized” to maintain financial stability and ensure adequate liquidity.

Villeroy said in an interview with reporters that the recent announcement of avatradescn.comprehensive "reciprocity" tariffs by the United States will only add reasons for further monetary easing. “We still have room for a rate cut,” he said.

Klaas Knot, a member of the ECB Management avatradescn.committee of the Netherlands, warned today that the escalating trade war constituted a "negative supply shock" and should be regarded as a "stagflation" nature.

Knot also warns that over time, economic impacts are more likely to be “more like inflation than deflation.”

The ECB’s priority is to monitor how and when these tariffs begin to have a meaningful impact on economic activity and corporate decision-making, he said.

However, it is too early to modify the forecast for next week's policy meeting.

Knot also pointed out that despite increasing market pressure, the operation of financial markets has been "retained" so far. He attributed this resilience to the active deleveraging of the hedge fund industry, saying they are well prepared for turmoil and able to meet margin requirements – unlike past market events.

U.S. Market

FOMC March meeting minutes show policy makers on the economyConcerns are growing, especially as uncertainty rises. While these discussions came before the sharp escalation of the U.S. tariff war in April, these insights remain valuable.

"Almost all" respondents believed that inflation risks tend to be "upward", and the "downward" risks of employment and growth are also marked, laying the foundation for policy dilemma.

Some officials stressed that the Fed may soon face "hard trade-offs", especially as inflation remains high and employment and growth prospects deteriorate.

It is worth noting that some participants also warned that the “sudden repricing of financial market risks” could amplify the impact of any negative economic shock. These avatradescn.comments seem prescient given what happened in the global market in April.

While meeting minutes may seem a bit outdated now, they still provide important benchmarks for understanding how the Fed may react in an increasingly vulnerable environment.

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