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05/03/2025 - 08:27 UTCThe US dollar fell once against most major currencies on Tuesday, with the USDX down by another 0.9% to hit three-month lows as markets reacted to the U.S. President’s first congressional speech since taking office, where he vowed to proceed with reciprocal tariffs, further unsettling markets. In an address to Congress, Trump said further tariffs would follow on April 2, including "reciprocal tariffs" and non-tariff actions aimed at balancing out years of trade imbalances.
To counteract rising trade tensions with the U.S. and bolster economic growth, China announced increased fiscal stimulus in Asia on Wednesday, aiming to stimulate consumer spending. As anticipated, the government maintained its GDP growth target at approximately 5%, which helped stabilize the USD/CNY pair. Elsewhere, the Japanese yen strengthened slightly against the dollar, following comments from the Bank of Japan's Deputy Governor Uchida that interest rate hikes would proceed in line with market expectations.
Wall Street suffered substantial losses once again on Tuesday, despite a mid-day rally driven by Nvidia, which ultimately closed 1.62% higher. Lingering global trade war worries, compounded by the anticipation of President Trump's speech, contributed to the market downturn. The US 30 fell 1%, the S&P 500 dropped 0.62%, while the US tech ended the session 0.3% higher. Despite a recent 13% stock drop after its earnings report, Citi reaffirmed its support for Nvidia on Tuesday, maintaining that the company's investment potential remains strong. Meanwhile, gains in other tech giants like Alphabet (+2%) helped limit overall market losses.
After hitting multi-month lows earlier in the day, WTI and Brent crude oil prices stabilized somewhat on Wednesday. This followed pressure from announcements of increased April production by major producers, as well as the impact of U.S. tariffs on Canada, Mexico, and China. Additionally, the planned OPEC+ output increase for April and growing hopes for a resolution in the Ukraine-Russia conflict, potentially bringing Russian supplies back to market, contributed to the day's volatility.
For Wednesday, the focus turns to the release of the ADP Non-Farm Employment report, U.S. ISM services PMI, U.S. Factory Orders and quarterly earnings reports from JD.com, Adidas, Zscaler and Bayer AG. For the week ahead, the focus turns to an interest rate announcement by the ECB, Non-Farm Employment Change and unemployment rate from the U.S., and speech by Fed Chairman Powell.
The EUR/USD soared 1.31% on Tuesday, as the US Dollar weakened amid growing expectations that President Donald Trump may walk back his tariff threats. While a 25% tariff on imports from Canada and Mexico took effect at midnight EST, markets quickly shrugged off initial risk aversion, betting on a potential policy reversal. Commerce Secretary Howard Lutnick hinted at a possible tariff pivot, with an announcement expected from Trump on Wednesday.
On the economic front, midweek European data remains limited as traders brace for key events: the European Central Bank’s (ECB) rate decision on Thursday and US Nonfarm Payrolls (NFP) on Friday. The ECB is widely expected to cut interest rates by 25 basis points to counter recession risks. Meanwhile, US ADP jobs data and ISM Services PMI are due later today, offering further insight into the labor market ahead of the crucial NFP release.
Gold prices climbed on Tuesday, reaching $2,915 per ounce with a 0.82% gain, as a weaker US Dollar supported demand for the precious metal. The decline in the Greenback followed the implementation of fresh tariffs—25% on Canadian and Mexican imports and an additional 10% on Chinese goods—fueling risk aversion and increasing bullion's appeal as a safe haven.
US economic concerns deepened after data from the Atlanta Fed projected a sharp GDP contraction of -2.8% for Q1 2025, a significant drop from Monday’s 1.6% estimate. Meanwhile, mixed ISM and S&P Global Manufacturing PMI readings signaled slowing growth, leading to a decline in US Treasury yields as traders priced in potential Federal Reserve rate cuts.
Bitcoin pared losses on Tuesday, ending the session at $87,311 after dipping to $81,492 earlier in the day. Dip buyers emerged despite ongoing uncertainty surrounding US tariffs and crypto regulations under President Donald Trump.
Earlier, Bitcoin and broader crypto markets had surged on Monday after Trump announced plans to include five cryptocurrencies, including Bitcoin and Ether, in a national crypto reserve. However, enthusiasm faded due to a lack of details on how the reserve would be structured and funded. Adding to the uncertainty, Trump’s own meme token, $TRUMP, has plummeted in value.
Meanwhile, pro-crypto appointments in key regulatory roles and an upcoming White House Crypto Summit on Friday may provide further clarity.
Oil prices dropped on Tuesday, hitting multi-month lows as reports emerged that OPEC+ will proceed with an April production increase of 138,000 barrels per day—the first since 2022. Brent crude settled at $71.14 per barrel, down 0.49%, while WTI crude dipped 0.57% to $67.92, with session lows touching levels last seen in September and November, respectively.
The unexpected OPEC+ move, seen as prioritizing politics over price, coincided with fresh U.S. tariffs—25% on imports from Canada and Mexico and 20% on Chinese goods. China swiftly retaliated with higher import levies and restrictions on U.S. companies, raising concerns over weakened global demand.
Further downside risks include slowing Chinese refinery activity and softer U.S. economic growth. Meanwhile, geopolitical tensions eased slightly, with reports of a forthcoming U.S.-Ukraine minerals deal. Traders now turn to U.S. crude stockpile data, set for release on Wednesday, for further market direction.
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