US Dollar hit hard as markets digest Trump’s tariff announcement

LONDON (April 3) The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is having a really bad day, trading at levels not seen since early October around 101.800 and correcting near 1.80% at the time of writing on Thursday. The US Dollar is being kicked out of portfolios while investors repatriate cash as they sell their stakes in US Equities amidst a harsh correction globally. 

Markets are digesting the reciprocal tariffs that were implemented overnight by the United States (US) President Donald Trump, where a global 10% tariff is the minimum base case for the 60 countries that are exporting to the US. From there, all other earlier tariffs remain in place, which means, for example, a total of  54% tariff on China applicable as of this Thursday. Meanwhile, the daily economic calendar continues with the US weekly Jobless Claims, ISM Services print and the Challenger Job Cuts for March to be released. 

Daily digest market movers: Data could accelerate further moves

• Treasury Secretary Scott Bessent commented, after the announcement of reciprocal tariffs by Trump, that tariffs could quickly be lifted or removed if countries bring back their production to the US. Bessent issued a statement as well, saying that it’s best for countries not to retaliate as this could be considered the worst-case scenario if they want to avoid more tariffs. 
• The US Challenger Job Cuts for March are seeing further cuts, coming in at 275,240 with the previous release at 172,017. 
• At 12:30 GMT, US weekly Jobless Claims data is due. Initial Claims are expected to remain stable at 225,000, coming from 224,000. The Continuing Claims has no forecast and was at 1.856 million previously. 
• At 13:45 GMT, US S&P Global will release the final Services Purchasing Managers’ Index (PMI) reading for March. Expectations are for a steady 54.3.
• At 14:00 GMT, the US Institute for Supply Management (ISM) will release the March Services report:
• • Services PMI is expected to drop to 53.0, coming from 53.5.
  • No forecast available for the Employment component with the previous reading at 53.9.
  • New Orders has no survey available, it came in at  52.2 previously.
  • Prices Paid has no forecast available either, with the previous reading at 62.6. 
• Equities are facing sharp corrections on the back of the overnight headlines. European futures are down between 1% and 2%, while US ones are down even more than 3% – for example, the Nasdaq – before the opening bell. 
• According to the CME Fedwatch Tool, the probability of interest rates remaining at the current range of 4.25%-4.50% in May’s meeting is 74.7%. For June’s meeting, the odds for borrowing costs being lower stand at 72.5%.
• The US 10-year yields trade around 4.06%, a fresh five-month low as a massive flight to safe haven Bonds is taking place. 

FXStreet