US assets were sold off by "triple kills", and US index may start gradual depreciation

Asian Handicap Market Review

On Monday, the US dollar index plummeted to its lowest level since March 2022, and as of now, the US dollar is quoted at 98.08.

Overview of fundamentals of foreign exchange market

Tariffs

① It is reported that Trump will meet with retail avatradescn.companies to discuss the impact of tariffs

② Sources: Thailand-US trade negotiations were originally scheduled to be held on April 23rd. ③ Vance meets Modi, India seeks Trump tariff reductions

④ India imposes a 12% tariff on some steel products for a period of 200 days

⑤ The United States plans to impose new tariffs on solar products imported from Cambodia, Thailand, Malaysia and Vietnam

⑥ Office of the United States Trade Representative: The roadmap with India has finalized a roadmap for reciprocal trade negotiations.

The situation in Russia and Ukraine

① Russia and Ukraine will not crack down on civil infrastructure and release dialogue signals

② Russian Ministry of Defense: After the truce is over, the Russian armed forces will continue to carry out special military operations.

Trump: There is almost no inflation (problem), asking Powell to cut interest rates, otherwise economic growth may slow down.

The monthly rate of the leading indicator of the United States Chamber of avatradescn.commerce in March was -0.7%, the largest decline since October 2023.

Summary of institutional views

Do Ming Securities: Investors areMore information is needed before buying depreciated U.S. Treasury analyst Molly Brooks said the uncertainty of tariffs has exacerbated Wall Street's uneasiness, and the expanding U.S. budget deficit poses a huge threat to the bond market. Recent issues have attracted more attention from the financial market, but "the story of the deficit will definitely be staged sometime this year." Treasury data scheduled for Wednesday will show whether foreign investors have been evading U.S. Treasury bonds as some analysts have warned. Bond prices and yields are attractive at present, but investors hope that (US) policies will be clearer before buying bonds.

ANZ Bank: The euro is expected to rise, how much room is the pullback caused by the progress of trade negotiations?

Amid a turbulent US trade policy, safe-haven funds are increasingly favoring the euro, and the options market shows a positive upward signal. The EUR/USD risk reversal curve is at its most bullish level in five years, indicating that expectations for further appreciation of the euro are getting higher and higher. Short-term euro calls are now more expensive than long-term calls, suggesting traders are rushing to buy short-term upside exposure. ANZ Bank's forecast for the 75 basis point rate cut in 2025 has been fully reflected in market prices, meaning interest rate policies are unlikely to push down the euro in the short term. If US-EU trade negotiations improve, the euro may pull back moderately to 1.12, but momentum is still rising.

Fanong Credit: The Federal Reserve will enter a long-term policy wait-and-see period after... after... the interest rate cut, with the terminal interest rate limit fixed at...

We expect the U.S. economic growth rate to slow down to 1.7% in 2025, and then rebound to 2.2% in 2026. This forecast is mainly based on a judgment on the timing of the Trump administration's policy adjustment: Overall, the boosting effect of a proactive fiscal policy with tax cuts and relaxation of supervision as the core is expected to exceed the drag caused by the imposition of tariffs and tightening of immigration policies, forming a moderate and positive growth-friendly policy avatradescn.combination.

However, larger tariff impositions pose a downside risk. We believe that policies with stronger negative effects may be implemented first, while policies that promote growth are relatively lagging behind in their effectiveness. This is the main reason that prompts us to make the above forecast for changes in economic growth. However, given that policy uncertainty is still at a high level, we will adjust the forecast model in a timely manner based on the progress of the situation. The current risk balance tends to be downward.

As for the moment, despite the slowdown in economic growth, it has not fallen into recession, and immigration restrictions may have certain constraints on the labor supply, we believe that the overall labor market will remain healthy, even if the employment market is expected to show moderate weakness this year. Unemployment is expected to climb to a peak of 4.4% in the third quarter of 2025 and will remain slightly over the entire forecast period.Above 4%. Affected by the policy portfolio, inflation may remain relatively sticky - signs of acceleration due to tariff shocks in the short term (probably temporary) but until the end of 2026, the overall and core CPI will still hover slightly above the target range, around 2.5% and 2.8% respectively.

In view of the moderate upward inflation and steady economic growth, we believe that the Fed's interest rate cut will be weaker than market expectations. It is expected that the cumulative interest rate cut will be 50 basis points in 2025, which will be implemented in June and September respectively, and will then enter a long-term policy wait-and-see period. The terminal interest rate limit for this round of easing cycle will be fixed at 4.00%.

Scotiabank Canada: The performance of the yen is not "outstanding", and the watershed between the US and Japan in the medium-term trends should be paid attention to...

The yen rose nearly 1% against the US dollar today, but in the context of the continued weakening of the US dollar, the cash in the yen and the G10 currency pair can only be considered medium, and it is far from being top-notch.

It should be noted that the US dollar and the Japanese yen are continuing to approach the 140 integer mark. Looking back at historical trends, this level is crucial to the medium-term trends between the United States and Japan. Here, the US and Japan "bottom downward trend" will be given in 2023 and 2024. Falling below this may lead to a weakening of the US and Japan in the medium term and further fall into the 120-130 support zone.

For now, the rise in the yen is pushing Japan and the United States to a local high and may cause the United States and Japan to fall to its lowest level since mid-2023. The trade representatives of the United States and Japan are currently planning to hold a second round of negotiations on April 24, which will be a key event that will mainly affect the trend of the United States and Japan this week.

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