As the new trading week kicks off on Monday, March 24, all eyes are on the release of preliminary Purchasing Managers Index (PMI) data from major economies, including Germany, the Eurozone, the United Kingdom, and the United States. These figures, released by S&P Global, are expected to shape early market sentiment and guide currency movements.
After showing strength for three consecutive sessions, the US Dollar (USD) begins the week on a softer note. The USD Index, which ended the previous week on a positive trajectory supported by the Federal Reserve’s cautious stance on future rate cuts and encouraging economic data, is now retracing slightly, hovering near the 104.00 level. In contrast, US equity index futures are seeing early gains in European trading hours, rising between 0.6% and 0.9%, signaling a shift toward a more optimistic risk environment.
Adding to market dynamics, the Wall Street Journal reported that the White House is reconsidering elements of its upcoming tariff strategy, set to take effect on April 2. The updated plan is expected to exclude certain industry-specific levies while emphasizing reciprocal tariffs targeting countries with significant trade relationships with the US.
Over in the Asia-Pacific region, Australian economic data showed a modest improvement in private sector activity. According to Judo Bank, the flash estimate for the Composite PMI rose to 51.3 in March from 50.6 in February. This uptick indicates a slightly stronger pace of expansion, boosting investor confidence. Consequently, AUD/USD is recovering after four straight sessions of losses and is approaching the 0.6300 mark.
In Japan, the outlook appears more subdued. Deputy Governor Shinichi Uchida of the Bank of Japan (BoJ) hinted at potential policy tightening, noting that interest rates could be raised if economic and inflation forecasts are met. However, PMI readings for March revealed weakening momentum—Jibun Bank’s Manufacturing PMI declined to 48.3 from 49.0, while the Services PMI dropped sharply to 49.5 from 53.7, signaling contraction in both sectors. Despite this, USD/JPY is edging higher, last seen near 149.70.
In Europe, the euro is making a modest recovery. EUR/USD, which fell over 0.5% last week, is climbing toward 1.0850 in early trading. Meanwhile, GBP/USD is inching higher but remains slightly below 1.2950. Market participants will be closely watching Bank of England Governor Andrew Bailey’s speech later in the day, where he is expected to address the state of the UK economy.
Gold, which experienced a record-setting rally earlier last week, has entered a consolidation phase. After retreating on Thursday and Friday, XAU/USD is holding above the $3,000 threshold, trading around $3,020 on Monday.
Understanding Tariffs: A Quick Overview
Tariffs are duties imposed on imported goods, aimed at protecting domestic industries by making foreign products more expensive. Unlike general taxes paid at the point of purchase, tariffs are levied at the port of entry and borne by importers. While some view tariffs as a protective tool, others caution against their inflationary effects and the risk of escalating trade conflicts.
With former President Donald Trump signaling a renewed focus on tariffs as part of his economic agenda, global trade dynamics could face fresh challenges, especially for top exporters to the US such as Mexico, China, and Canada.
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