Another About-Face in the Marketplace – Currency Thoughts

Another About-Face in the Marketplace

April 23, 2025

Markets improved dramatically after flip-flopping President Trump changed his tone in two respects, signaling no intention of firing Powell and turning down the heat against China and in other trade negotiations.

• The weighted DXY dollar index has strengthened 0.8% so far today.
• Major U.S. stock indices have rebounded 1.5-3.0%.
• Equities are also sharply higher in Asia and Europe.
• Gold retreated 3.3%, and Bitcoin, which had falling below $78,000 earlier this April, is now above $93,800.

Preliminary April purchasing manager survey results nonetheless attest to great damage done by the wholesale change in U.S. policies and the erratic manner in which such have been introduced. Sub-indices for the perceived business outlook swooned around the world. The composite PMI indices weakened more than forecast in most cases, touching a 17-month low in Great Britain, a 16-month low in the United States, 4-month lows in Euroland and Germany, and 2-month lows in France and Australia. Japan’s composite PMI recovered to a 2-month high from March’s 28-month low, and India also defied gravity  with an 8-month high reading of 60.0.

Central Bank officials in Indonesia and Azerbaijan left their policy interest rates of 5.75% and 7.25% unchanged as expected, a common response of monetary authorities to the extremely uncertain global political and economic outlooks. Indonesia’s rate was last cut in January, while the previous Azerbaijani rate reduction was made in May 2024.

Construction output in the euro area fell 0.5% in February and was 0.2% above its year-earlier level. Separately, a trade surplus of EUR 24.0 billion in February was larger than that of EUR 21.7 billion a year earlier.

Japan’s tertiary index, which measures service sector activity, stayed unchanged in February from January’s reading and posted its smallest year-on-year advance (0.1%) in 11 months.

Malaysian consumer price  inflation of just 1.4% in March constituted a 49-month low. Singaporean CPI inflation that month remained at February’s 49-month low. CPI inflation in South Africa dropped half a percentage point to a 57-month low in March of 2.7%. Hong Kong inflation held steady at a 4-month low of 1.4%, and Lebanese CPI inflation, which had soared to 268.8% in April 2023, printed at a 61-month low of 14.2% last month.

Mexican retail sales edged 0.2% higher in February but were 1.1% lower than a year earlier.

Canadian house prices held unchanged in March, and U.S. new home sales that month leaped 7.4% to a 6-month high.

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Bank Indonesia, Central Bank of Azerbaijan, Preliminary April 2025 purchasing manager survey results

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on Wednesday, April 23rd, 2025 at 11:14 am and is filed under New Overnight Developments Abroad – Daily Update.
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