The ongoing trade conflict continues to disrupt global financial markets. The United States has revised its tariffs on Chinese imports from 125% to 145%, prompting China to retaliate by raising its own tariffs on U.S. goods to 125%. These steep increases have rendered many products economically unviable, reducing the effectiveness of further tariff hikes. Equity markets felt the initial shock, with mixed performances across the Asia Pacific. While some markets such as Hong Kong and India showed gains, others saw significant declines. Overall, volatility remains high, and further market disruptions are likely amid the escalating trade tensions.

Asia Pacific Markets

The Japanese yen saw significant movement this week, with the dollar falling from JPY148.00 to nearly JPY142.00—the lowest level since last October. This marks the third straight session of daily moves exceeding 1%, suggesting heightened investor uncertainty.
Meanwhile, the Australian dollar briefly rose to a weekly high near $0.6250 following a bullish reversal, settling above $0.6200 for the first time in five days. However, it remains weaker compared to other major currencies. Still, the Australian and New Zealand dollars have posted solid weekly gains, reflecting a broader rebound in commodity-linked currencies.

European Markets

The euro surged past its previous 2024 highs, reaching a three-year peak near $1.1475 before settling lower around $1.1360. This marks a significant break above long-term averages, including the 10-year moving average, suggesting strong upward momentum.
Meanwhile, the British pound climbed for the third consecutive session, nearing $1.3135 and surpassing key technical levels. UK economic data showed a 0.5% GDP rise in February, well above forecasts. However, sterling's performance has trailed behind the euro, despite gains supported by improved industrial and service sector output and a moderate recovery in construction.

American Markets

The U.S. dollar has come under heavy pressure, with the Dollar Index plunging nearly 3.8% this week. It touched a three-year low near 99.20, driven by renewed fears of recession and the fallout from heightened tariffs. U.S. bond and equity markets have already seen significant corrections, and now the currency is following suit. Although there are slight recoveries, the dollar remains deeply oversold. Upcoming data, including March's PPI and consumer sentiment from the University of Michigan, could influence inflation expectations, but the impact of collapsing oil prices and continued economic uncertainty weighs heavily on market sentiment.