Choppy financial markets are anticipated on Wednesday as the US prepares for President Trump’s tariff announcements at 20:00 GMT. The US economic calendar includes March ADP Employment Change and February Factory Orders data, with attention on central banker comments.
The US Dollar showed varied performance against major currencies over the last week, gaining 0.07% against the Euro and 0.31% against the Yen, while it declined by 0.13% against the British Pound. US Treasury Secretary Scott Bessent indicated that the announced tariffs would not exceed the announced amounts, though countries might adjust them later.
Usd Struggles After Weak Data
The USD struggled following disappointing JOLTS Job Openings and ISM Manufacturing PMI data, fluctuating above 104.00. The EUR/USD traded sideways below 1.0800, while GBP/USD remained flat around 1.2900.
Gold corrected from a record high, trading around $3,110 early Wednesday. USD/JPY found support above 149.00 and edged higher in the morning.
Tariffs are customs duties on imports designed to benefit local producers. While some see them as protective, others argue they can lead to increased prices and trade wars.
Trump plans to utilise tariffs to support the US economy, focusing on imports from Mexico, China, and Canada, which represented 42% of total US imports in 2024. He aims to generate revenue from tariffs to reduce personal income taxes.
With the White House moving towards additional trade measures, volatility is likely to persist, especially in the short term. Taking into account the 20:00 GMT announcement, it’s clear that markets are treading cautiously, particularly those tied most closely to global trade dynamics. While Bessent calmed some nerves by assuring that tariffs won’t surpass previously flagged levels, any further remarks or clarifications could shift sentiment quickly.
Mixed Dollar Performance Reflects Caution
The broader reaction of the US Dollar, judging by its mixed performance, tells us that trader positioning remains tentative. It performed slightly better against the Yen, which often acts as a risk-off play, and was stable against the Euro. Its dip against the Pound suggests the market is modestly favouring the UK currency following recent macroeconomic strength. However, this mild divergence should not be overemphasised; underlying support for the Dollar cannot be ignored, especially if tariffs spark foreign retaliation and reduce external demand, thereby pushing investors back into US assets for safety.
We have seen the Dollar hold above a key psychological handle around 104.00 even after weaker employment and manufacturing activity figures. This tells us that market confidence in broader US strength is dented, but not undone. Short-term momentum is under pressure, yet there is a likelihood of positional repricing if data surprises to the upside or if the tariff plan appears less disruptive than initially feared.
Gold’s pullback from recent highs could be temporary. The metal came off its peak near $3,110, which suggests that traders may be locking in profits ahead of tonight’s risk events. If trade-related fears resurface or data prints come in below expectations, gold could quickly regain its appeal. That said, any retest of highs will need to be accompanied by a softer Dollar and continued risk aversion.
Meanwhile, USD/JPY’s traction above 149.00 points to some resilience in Dollar purchasing, though this pair remains highly sensitive to Treasury yields and broader expectations for US monetary policy. Should yields extend a leg higher, the pair could challenge recent resistance again. On the contrary, weak employment signals would likely curb upside.
With tariffs set to be levied mainly on imports from China, Mexico, and Canada—almost half of total inbound trade—the risk is not just to domestic pricing but to supply chains and import cost structures. The intention to use tariff revenue to offset personal taxes may find political backing, but from a market perspective, it adds unpredictability in consumer price trends and the Fed’s inflation path.
As traders, the calendar over the coming days must be watched closely. ADP employment data set for later today is expected to act as a barometer ahead of Friday’s official non-farm payrolls. Following earlier disappointments in job openings and factory performance, any downside surprise could accelerate Dollar losses, particularly if it sparks debate around fed fund rate path expectations. At the same time, stronger-than-expected results may cushion the Greenback but could be overshadowed by political moves.
Repricing scenarios are likely across risk assets depending on the exact language of the tariff proposals. From our perspective, trading strategies through the coming week should give weight to increased volatility potential. This may reward positioning in FX pairs with defined risk parameters and commodities sensitive to global macro shifts.
For now, the focus remains on reaction rather than prediction. Markets are likely to shift based less on the tariffs themselves and more on the uncertainty around their consequences. Every new piece of commentary from policymakers could trigger recalculated expectations, and as such, requires nimble response.
