Daily Analysis 02/04/2025

• GBP/USD Price: The GBP/USD pair remains cautious above 1.2900 early Wednesday, unable to sustain the overnight bounce due to renewed US Dollar demand.
• US Tariffs: The UK is expected to face new US tariffs, with no exemption deal in sight, creating a negative outlook for British exports and pressuring the GBP/USD pair.
• US Manufacturing: The ISM Manufacturing PMI for March fell to 49.0, lower than both the prior 50.3 and the forecast of 49.5, signaling a slowdown in US industrial activity ahead of tariff announcements.
• Goldman Sachs Forecast: Goldman Sachs now expects three Fed rate cuts in 2025, citing economic strain from upcoming US tariffs, which could impact USD strength moving forward.
• US Economic Data: Investors await the ADP private-sector employment report and Factory Orders data, which could influence Fed rate expectations and USD movements.

Closing statement: GBP/USD remains vulnerable as US tariff risks and stronger USD demand cap upside potential. Traders will closely watch US data releases and Fed rate expectations for further direction.

• XAU/USD Price: Gold (XAU/USD) regains traction as global tariff concerns and expectations of Fed rate cuts keep the US Dollar under pressure, supporting demand for the safe-haven metal.
• Expansive Tariffs: The Wall Street Journal reported that the White House is considering up to 20% tariffs on nearly all US trading partners, with Trump rejecting narrower tariff plans late Monday, fueling market uncertainty.
• US Job Openings: The JOLTS report revealed a drop in job openings to 7.56 million in February from 7.76 million previously, suggesting a softening US labor market that could reinforce Fed rate cut bets.
• Upcoming Data: Traders will be watching the US ADP Employment Change data, with forecasts of 105,000 new private-sector jobs, up from February’s modest 77,000 increase, potentially impacting USD and gold price direction.
• Fed Commentary: Federal Reserve Governor Kugler is set to speak on inflation and monetary policy, providing further insights into the Fed’s rate outlook.

Closing statement: Gold remains well-supported amid rising tariff risks and softening US labor data. Upcoming jobs data and Fed commentary could dictate the next move for XAU/USD.

• Crude Oil Price: West Texas Intermediate (WTI) crude oil trades around $71.10 in early European hours, as geopolitical tensions and trade concerns keep volatility high.
• Secondary Tariffs: President Trump warned that he could impose 25% to 50% secondary tariffs on nations buying Russian oil, escalating geopolitical risks and potential market disruptions.
• US Crude Stockpiles: The API weekly report showed that US crude inventories rose by 6.037 million barrels, suggesting weaker domestic demand and potentially pressuring oil prices.
• OPEC+ Meeting: Traders will closely monitor the OPEC+ ministerial meeting on Saturday, with sources indicating a planned production increase of 135,000 barrels per day in May, following a similar April hike.
• Tariff Announcements: Trump’s upcoming broad tariff announcement may intensify concerns over global economic growth, potentially dampening oil demand and adding downward pressure on prices.

Closing statement: While geopolitical risks and OPEC+ decisions remain key drivers, rising US stockpiles and potential tariff-induced demand concerns could limit upside potential for WTI crude in the near term.

• DAX Price: The DAX surged 1.70% on Tuesday, April 1, closing at 22,540, despite ongoing uncertainty around US tariff policies. Only six out of 30 DAX stocks ended the session in the red.
• Economic Forecast: The German banking association revised its 2025 GDP growth forecast down to 0.2% from 0.7%, citing weak demand and trade uncertainty. A recovery to 1.4% growth is expected in 2026.
• Eurozone Inflation: Core inflation declined from 2.6% to 2.4% in March, bringing it closer to the ECB's 2% target, reinforcing expectations of monetary easing in the coming months.
• Tariff Concerns: Analysts at Deutsche Bank warn that broad-based US customs surcharges could cause a major economic shock, with significant global repercussions if trade tensions escalate.
• US Data: Market sentiment will be influenced by the release of US industrial orders, the ADP private employment report, and weekly oil inventories, which could provide further direction for global risk assets.

Closing statement: While the DAX rebounded, trade tensions and slowing growth forecasts continue to cloud the outlook. Investors will watch economic data and US tariff decisions for further market signals.