ShareKUWAIT: Over the past two weeks, the US Dollar Index (DXY) has experienced significant volatility, primarily driven by geopolitical developments and shifting investor sentiments. On April 3, the EUR/USD pair surged to 1.1145, over 300 pips above its weekly opening. This sharp appreciation was attributed to market reactions to US President Donald Trump’s announcement of reciprocal tariffs on imports from various countries, including EU nations. While other countries such as China have reacted implementing 34 percent retaliatory tariffs on the US.
The tariffs raised concerns about a potential global economic slowdown, leading to a sell-off in the US dollar, reaching 102.893. US equities also experienced a sharp selloff, with the S&P 500 falling to 5,074.08, down from 5,680 levels earlier in the week. While the Nasdaq and Dow Jones fell by-5.82 percent and -5.50 percent respectively. Despite a strong US jobs report, markets are currently pricing in a 50 percent probability of a rate cut in May.
Durable goods orders
US durable goods orders unexpectedly rose 0.9 percent ($2.7 billion) to $289.3 billion, beating expectations of a 1 percent decline. This followed a strong 3.3 percent increase in January. Transportation equipment led the gains, particularly motor vehicles (4 percent) and defense aircraft (9.3 percent). Orders also rose for machinery (0.2 percent), fabricated metal products (0.9 percent), computers (1.1 percent), and electrical equipment (2 percent). However, capital goods orders fell 1.5 percent, and non-defense capital goods excluding aircraft an indicator of business investment—declined 0.3 percent, marking the first drop in four months. Business spending may be constrained by uncertainty over tariffs.
ISM manufacturing PMI
The Institute for Supply Management (ISM) recently shared its monthly Manufacturing Purchasing Managers’ Index (PMI) report, a key measure of US factory activity. This index tracks trends in the manufacturing sector by surveying over 400 industrial companies. The latest PMI reading dropped to 49.0, which is below the critical threshold of 50. A number under 50 means the sector is shrinking rather than growing. This result was worse than what experts had predicted (49.5) and lower than the previous month’s reading of 50.3, which had shown slight growth.
The decline highlights ongoing struggles in manufacturing, such as delays in supply chains and other operational challenges. The PMI is calculated using five main factors: New Orders, Production, Employment, Supplier Deliveries, and Inventories, each weighted differently. When these areas slow down, the overall index falls. A weaker PMI often signals trouble for the economy, since manufacturing is a major part of US economic activity. A lower-than-expected reading like this could also weaken the US dollar, as investors may worry about the country’s economic strength. However, the report notes that monthly data can swing due to temporary factors like weather events, holidays, or logistical hiccups. For example, a harsh winter storm or a factory shutdown during a holiday might distort the numbers.
JOLTS job openings
In February, US job openings declined by 194,000 to 7.568 million, signaling a slowdown in labor demand amid growing economic uncertainty. The drop, reported by the Labor Department’s JOLTS survey, comes as businesses react to a wave of tariffs imposed by the Trump administration on imports such as steel, aluminum, and automobiles. January’s job openings were revised slightly upward to 7.762 million, while layoffs increased by 116,000 to 1.79 million, still historically low but showing signs of strain. President Trump’s announcement of broad tariffs and the upcoming introduction of “reciprocal” global duties, labeled “Liberation Day,” have dampened both business and consumer sentiment. Economists now see a higher risk of recession, driven by rising prices and supply chain disruptions. Many warn that these factors, along with a hiring freeze and significant planned federal workforce reductions, could further slow job growth and lead to more layoffs in the coming months.
President Trump speaks
President Donald Trump stepped up US trade actions by imposing the highest import taxes in a century, part of his push to change global trade. This move worried investors, who fear it could hurt US growth by sparking a trade war. On Wednesday, Trump ordered a 10 percent tax on all imports, with even higher taxes on 60 countries including China, the EU, Japan, and Vietnam—claiming they sell more to America than they buy. China now faces over 50 percent taxes on many products. At a White House event, Trump said American workers had been “left behind” while other nations grew wealthy “at our expense,” adding, “Now it’s our turn to prosper.” This move takes Trump’s trade war to a new level, risking that other countries might strike back. Trump sees taxes on imports as a way to boost US power, bring back factory jobs, and pressure other nations—rejecting the old idea that less trade restrictions help countries work together. Experts warn this could raise prices, slow growth, and maybe cause a recession.
UK consumer price index y/y
In February 2025, the UK’s annual inflation rate fell to 2.8 percent from 3 percent in January, below the expected 3 percent but aligning with the Bank of England’s forecast. The biggest downward pressure came from clothing prices, which declined for the first time since October 2021 (-0.6 percent vs. 1.8 percent), along with slower inflation in recreation and culture (3.4 percent vs. 3.8 percent) and housing and utilities (1.9 percent vs. 2.1 percent). Food inflation remained steady at 3.3 percent, while transport (1.8 percent vs. 1.7 percent) and restaurant/hotel prices (3.4 percent vs. 3.3 percent) rose faster. Core inflation eased to 3.5 percent from 3.7 percent, and the monthly CPI increased by 0.4 percent, rebounding from a 0.1 percent drop but below the expected 0.5 percent rise. The GBP/USD currency pair was last seen trading at 1.2890
Lagarde speaks
European Central Bank (ECB) President Christine Lagarde stressed the need for ongoing vigilance against inflation, despite growing uncertainty linked to US trade policies under President Donald Trump. Speaking to France Inter Radio on March 31, she described the fight to stabilize prices as a “daily struggle,” emphasizing that while the ECB is nearing its 2 percent inflation target, policymakers must remain steadfast. “We are almost where we should be, but we have to stay there it’s a constant battle,” she said.
The ECB has lowered interest rates six times since June, but disagreements persist ahead of its April 17 meeting, partly due to Trump’s announcement on retaliatory tariffs and their uncertain global impact. Lagarde acknowledged differing views among policymakers: Some advocate faster rate cuts, while others urge caution to assess risks. “Some want to gallop ahead; others prefer a slow trot,” she remarked. With March eurozone inflation data due soon expected to show minimal improvement, Lagarde urged patience, advising against speculation. “Let’s analyze the data as it comes, without forecasting.
Our focus must remain on price stability. It’s our compass,” she said. She also criticized Trump’s trade measures, warning that tariffs on sectors like autos would potentially harm the global economy. “Trade wars leave no winners, not even the US,” she stated. However, Lagarde framed the turmoil as an opportunity for Europe to assert independence in energy, finance, and strategic sectors. “We’re two days away from a major geopolitical shift driven by US decisions. Europe must seize this moment to take control of its future,” she said, calling it an “existential moment” for the bloc to strengthen self-reliance and secure its economic sovereignty. The EUR/USD currency pair was last seen trading at 1.0955
Asia-Pacific
China has imposed extensive 34 percent tariffs on all US imports, retaliating against President Donald Trump’s latest trade measures and escalating fears of a global trade war. The move, effective April 10one day after US “reciprocal” tariffs take effect sent global markets tumbling, with the S&P 500 dropping 3.3 percent and Europe’s Stoxx 600 falling 4.4 percent right after the news release. Trump, undeterred by the market instability, vowed on Truth Social, “CHINA PLAYED IT WRONG; THEY PANICKED, THE ONE THING THEY CANNOT AFFORD TO DO!”
The new Chinese tariffs match Trump’s recent hike, which raised average US duties on Chinese goods to a historic high surpassing his campaign threats. Beijing condemned the US actions as “unilateral bullying,” while also restricting rare earth exports and launching an investigation into DuPont’s China operations. Analysts note China’s retaliatory tariffs now average 50 percent on US imports, marking a “significant escalation” in the conflict. Trump doubled down on his stance, insisting his policies “WILL NEVER CHANGE” and urging investors to capitalize on the moment:
“THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!” However, experts warn the tit-for-tat measures risk destabilizing global trade norms, with Beijing accusing the US of violating international rules and harming China’s economic interests. As markets reel, neither side shows signs of backing down, deepening uncertainty for businesses and investors worldwide. The USD/CNY currency pair was last seen trading at 7.2813
The AUD/USD currency pair was last seen trading at 0.6041
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USD/KWD closed last week at 0.30800
