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The trade war continues and the US CPI slows unexpectedly, and the US dollar index falls further
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: The trade war continues and the US CPI slows down unexpectedly, and the US dollar index falls further." Hope it will be helpful to you! The original content is as follows:
On the Asian session on Friday, the US dollar index hovered around 100.32. Affected by the sharp rise in the yen and Swiss franc, the US dollar index fell nearly 2% on Thursday, with an intraday low of 100.69, a new low since October 1, closing at 100.98. Several Federal Reserve officials will still make speeches on Friday, and investors need to pay attention to it. In addition, they need to pay attention to the performance of the PPI data in March, and pay attention to changes in the international trade situation and market risk aversion sentiment.
Analysis of major currency trends
Dollar: As of press time, the U.S. dollar index hovered around 100.32, and the U.S. dollar index (DXY) was close to the 101 area in trading Thursday, falling further as it failed to maintain the rebound momentum earlier this week. The move xmserving.comes as new tariffs confirmed by the White House raise the effective tax rate for Chinese imports to an astonishing 145%. Federal Reserve officials, including Jeff Schmid and Lori Logan, warned that these trade actions could exacerbate inflation and labor market dynamics. On the technical side, MACD continues to send out selling pressure signals, while the Relative Strength Index (RSI) hovers above the oversold area. As the lower action energy increases, DXY remains fragile.
1. Venezuela's Vice President: Unreasonable US tariff policy is doomed to fail
On April 10, local time, Venezuelan Vice President Delsi Rodriguez delivered a speech at the Venezuelan National Assembly, strongly criticizing US President Trump's global tariff policy. She accused the United States of attempting to control the world through an "unprecedented global trade war", saying the policy was "doased to fail." Rodriguez pointed out that the United States "ignored" international trade relations and related international law and implemented a "obviously irrational" policy, and its "main victim" would be the American people.
2. Federal Reserve Director Bowman: The impact of tariffs is "unclear yet".
Federal Reserve Director Bowman said on Thursday that the U.S. economy was strong, noting that recent data showed a decline in inflation last month. Although she admitted that investors were worried that Trump's trade policy would hurt the economy and trigger recent financial market volatility, she refused to express any opinions on how tariffs would affect inflation or the labor market. At a hearing to review the nomination of the Fed’s vice-chairman for regulation, Bowman said: “We are observing and waiting to see how the paths of these policies continue to evolve and we will understand their economic impact.” “It is not clear at this point because we don’t know what economic policies will look like.”
3. Russian officials: Russia intends to participate in full 2028-year Los Angeles Olympics
Russian Minister of Sports and Chairman of the Russian Olympic xmserving.committee Mikhail Jegdyalev said that the Russian Ministry of Sports hopes that the Russian national team can fully participate in the 2028 Los Angeles Summer Olympics. "The goal is to participate in the 2028 Summer Olympics: our national team, under our banner, fully recovered," said Jegdyalev, referring to the Los Angeles Olympics. As for the 2026 Milan Winter Olympics, he said, "It is unlikely that we will participate fully because there is little time left, less than a year", although Russia has "concessions" on three events at present.
4. Federal Reserve Director Bowman will be questioned by the Senate
Federal Reserve Director Bowman will be questioned at a Senate Banking xmserving.committee hearing on Thursday, and lawmakers are considering nominating her as vice chairman of regulation. Senators from both parties may ask how Bowman intends to xmserving.comply with executive orders that restrict the power of independent institutions and is eager to know how she will deal with a plan that requires several of the largest U.S. banks to significantly increase their capital to buffer losses and financial crises. She has been a sharp critic of the landmark bank capital proposal, which was originally released in 2023. In his prepared speech, Bowman emphasized that there are flaws in regulation and that the regulatory framework in the United States has become too xmserving.complex. Bowman said: "If confirmed, I will prioritize reform and refocus on regulation, restore the targetedness of regulation, ensure viable paths for innovation in the banking system, and promote transparency and accountability."
5. Bank of England Deputy Governor Briden: Weaker pound brings inflation risks
Bank England Deputy Governor Briden said policy makers are closely watching the potential weakness of the pound in search of signs of how to deal with Trump's trade war. Briden warned that tariffs will hit Britain's economic growth. Although the possible impact on inflation is not yet clear, she pointed out that the exchange rate is a "key determinant". "I think it's very important to look at the exchange rate outlook," Briden said. "It's also uncertain and will depend heavily on other countries' decisions to impose counter-tariffs, the evolution of global risk sentiment and the development of broader financial markets." A weaker pound could make UK imports more expensive, thereby exacerbating price pressures. This hasn't happened yet, but "this may change," Briden added.
Institutional View
1. Analysts: Tariff disputes will lower euro zone inflation, and the European Central Bank may further cut interest rates.
Capital Investment macro analyst Jack Allen Reynolds wrote that the global trade war will lower the euro zone's price increase, leading to further cut interest rates in the currency zone in the future. Allen Reynolds said some European Central Bank policymakers say European retaliation against Trump's tariffs could lead to a surge in inflation, but the reaction could be reconciliationThe influence is limited. At the same time, falling energy prices and general hits in demand, investment and confidence will curb price increases, and businesses affected by tariffs may not receive much financial support. Intensified xmserving.competition could also push down xmserving.commodity prices, Allen Reynolds added. He said: "This strengthens the reason why the ECB continues to cut interest rates in the xmserving.coming months."
2. Market analysis: The decline of the pound against the euro may be excessive.
Ebury analyst Matthew Ryan said that given that the blow to the euro zone economy by the U.S. tariffs should hit the euro zone economy more severely than the UK, the recent sharp decline of the pound against the euro is puzzling. He said the euro has always played a safe haven role, but the appreciation of the euro against the pound seems a bit far-fetched. Given the UK's trade deficit with the United States and its low dependence on xmserving.commodity exports, the UK appears to be able to withstand tariffs. The pound rebounded slightly as risk appetite improved after the United States postponed tariffs on most countries. "Any sign of progress in the US-UK trade agreement may provide further upward support."
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