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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Avatradescn]: The US dollar rebounds in the short term by 100 key threshold, Trump releases a big signal to lower tariffs on China!" Hope it will be helpful to you! The original content is as follows:
On May 6, during the Asian session on Tuesday, the US dollar rebounded slightly to 100, and the Taiwan dollar continued to rise since last Friday, setting the largest increase since the 1990s. Foreign media reported unconfirmed speculation that any trade agreement that may reach with the United States may involve exchange rate readjustment. Taiwan and the United States trade negotiations held their first formal talks on May 1, but the results have not been announced yet.
At the beginning of this week, speculation about a potential trade deal triggered a sharp rise in the NTD and caused a response in the global foreign exchange market, and the US dollar was hit again.
The dollar has been under pressure as U.S. President Trump's economic agenda weakened attitudes toward U.S. assets, and the dollar further weakened against most major currencies on Monday. The Bloomberg dollar index closed down about 0.2% in New York, after recovering its earlier decline.
The Taiwan dollar led the rise among the 16 major currencies tracked by Bloomberg, and once hit its biggest gain in more than 30 years in the early trading week. The yen rose about 0.9%, leading the G10 (G10), with the euro/dollar exchange rate breaking through the 1.13 mark.
Since taking office in January this year, Trump's aggressive trade rhetoric has shaken the macro market, weakening the dollar's traditional safe-haven status in a period of economic tensions, causing investors to withdraw from U.S. assets.
In recent days, investors have focused on the scope and nature of the trade and tariff agreements negotiated by the Trump administration with key partners and whether this would involve coordinated efforts by global policymakers to further weaken the dollar.
Arindam Sandilya, a global foreign exchange strategist at JPMorgan in Singapore, describes Asian currencies in the podcastRecent trends, he said avaforexcn.com: "We are all a little shocked by the region. The sharp synchronous appreciation of the currency has triggered discussions among central banks in the region about reaching a certain currency agreement."
Despite a slowdown in May, the Bloomberg dollar spot index has still fallen nearly 7% this year, the biggest drop since its inception 20 years ago. Meanwhile, traders in speculative derivatives markets have reached their highest level since September, according to latest data from the U.S. avaforexcn.commodity Futures Trading avaforexcn.commission (CFTC).
Asian Market
China's Caixin Service Industry Purchasing Managers Index fell from 51.9 to 50.7 in April, lower than the expected 51.7. The avaforexcn.comprehensive purchasing managers index also fell from 51.8 to 51.1, indicating that the momentum in the manufacturing and services sectors has weakened.
Caixin.com's Wang Zhe said that amid the intensification of trade frictions, the expansion of supply and demand has slowed down. Export-driven industries remain under particularly stressful, while unemployment and sluggish pricing power continue to squeeze corporate profit margins. The employment part of the avaforexcn.comprehensive index also contracted.
Perhaps most worrying is that expectations for future economic activity fell to the lowest level on record, reflecting an increase in uncertainty within the business. "The ongoing tariff impasse between China and the United States will gradually be felt in the second and third quarters," Wang added.
European Market
Fabio Panetta, a member of the ECB Management avaforexcn.committee of Italy, warned today that the rise of protectionism poses a serious threat to global economic stability
Panetta said at an event: "Trade opening is good for developed and developing countries, reducing inequality and lifting hundreds of millions of people out of extreme poverty.
However, "protectionism has the potential to erase these achievements and weaken the structure of global prosperity," he added.
He stressed that geopolitical tensions and the growing uncertainty of global trade are becoming the main considerations for policy makers.
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The Eurozone Sentix Investor Confidence Index rose sharply from -19.5 to -8.1, far higher than expected. The status quo index climbed from -23.3 to -19.3, the highest level since August 2024. The expected index turned positive, rising from -15.8 to 3.8.
Sentix attributed the improvement in market sentiment to the European avaforexcn.commission's "calm response" to the escalation of U.S. trade action. In addition, unexpected improvements in inflation data reinforced expectations that the ECB would be able to continue its gradual rate cut cycle.
While investors were obviously more optimistic, Sentix noted that sentiment was "more sluggish than March, but basically flat.'" .
Swiss consumer price growth stagnated in April, with overall CPI flat on the second straight month.
On the year, inflation slowed sharply from 0.3% year-on-year to 0.0%, marking a flat price level that has never been seen since deflation in early 2021.
Core CPI (excluding fresh and seasonal products, energy and fuels) also lost its momentum
The weak inflation was driven by the decline in domestic product prices, which fell -0.1% month-on-month and slowed to 0.8% year-on-year. Meanwhile, the prices of imported products slightly offset, up 0.3% month-on-month, but still contracted -2.5% year-on-year (the previous value fell 1.7% year-on-year).
U.S. market
U.S. The ISM Services Purchasing Managers Index rose to 51.6 from 50.8 in April, surpassing the expected 50.6. This growth was driven by strong new orders, which rose to 52.3 from 50.4.
Business activity, however, fell to 53.7 from 55.9. Employment rebounded to 49.0 from 46.2, but remained in the contraction zone for the second consecutive month.
Most notable Development is a sharp jump in the price index - from 60.9 to 65.1 - the highest level since January 2023.
Overall, the data shows moderate economic growth, and ISM estimates annualized GDP growth by 1% based on service industry readings.
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