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Japan Reuters Tankan

Japanese manufacturers reported a rebound in sentiment in April, according to the latest Reuters Tankan survey, but the outlook for the next quarter has turned gloomy amid rising concerns over U.S. tariffs. The manufacturers’ index rose to +9 from -1 in March, indicating more optimism than pessimism. However, sentiment is expected to weaken again by July, with the index projected to slip back to zero.

The shift in mood reflects growing caution as companies brace for the fallout from Trump’s sweeping tariffs, including a 25% duty on car and truck imports and a 24% tariff on Japanese goods—temporarily reduced to 10% for 90 days. Export-oriented sectors like autos and machinery voiced particular concern, citing a drop in orders and hesitation among clients to invest.

Uncertainty around U.S. trade policy was the dominant theme, though some firms also flagged weak Chinese demand as a headwind, along with low-priced Chinese goods reportedly undercutting the domestic market.

Sentiment among non-manufacturers remained stronger, with the index rising to +30 in April from +25 in March, though that too is expected to decline to +21 by July. Real estate and IT firms remained upbeat, but shipping companies warned of rising labour costs and declining volumes linked to U.S.-China trade tensions.

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Reuters Tankan is a monthly survey that seeks to track the Bank of Japan’s tankan quarterly survey

• respondents spoke on the condition of anonymity
• Reuters Tankan indexes are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. A positive reading means optimists outnumber pessimists.

This article was written by Eamonn Sheridan at www.forexlive.com.

Japan Reuters Tankan

Japanese manufacturers reported a rebound in sentiment in April, according to the latest Reuters Tankan survey, but the outlook for the next quarter has turned gloomy amid rising concerns over U.S. tariffs. The manufacturers’ index rose to +9 from -1 in March, indicating more optimism than pessimism. However, sentiment is expected to weaken again by July, with the index projected to slip back to zero.

The shift in mood reflects growing caution as companies brace for the fallout from Trump’s sweeping tariffs, including a 25% duty on car and truck imports and a 24% tariff on Japanese goods—temporarily reduced to 10% for 90 days. Export-oriented sectors like autos and machinery voiced particular concern, citing a drop in orders and hesitation among clients to invest.

Uncertainty around U.S. trade policy was the dominant theme, though some firms also flagged weak Chinese demand as a headwind, along with low-priced Chinese goods reportedly undercutting the domestic market.

Sentiment among non-manufacturers remained stronger, with the index rising to +30 in April from +25 in March, though that too is expected to decline to +21 by July. Real estate and IT firms remained upbeat, but shipping companies warned of rising labour costs and declining volumes linked to U.S.-China trade tensions.

***

Reuters Tankan is a monthly survey that seeks to track the Bank of Japan’s tankan quarterly survey

• respondents spoke on the condition of anonymity
• Reuters Tankan indexes are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. A positive reading means optimists outnumber pessimists.

This article was written by Eamonn Sheridan at www.forexlive.com.

JP Morgan says it has turned bearish on base metal prices in the near term

• forecast 2q25 averages of $8,300/MT for copper and average price of $8,812/MT for 2025

Aluminium:

• 2q25 averages of $2,200/MT and an average price of $2,369/MT for 2025

Nickel:

• average $14,000/MT in 2q25, with an average price of $15,020/MT for 2025

Zinc:

• average $2,500/MT in 2q25 for zinc, with an average price of $2,646/MT for 2025

JPM cite weaker demand forecasts, particularly in Asia ex-China

• lower demand forecasts, driven by global trade disruptions, reduced demand from electric vehicles

• tariff-driven cuts to economic growth forecasts, increased probability of recession this year leads to steep cuts to metals demand forecasts

This article was written by Eamonn Sheridan at www.forexlive.com.

Trump has launched a probe into the need for tariffs on critical minerals

China earlier:

• ICYMI – China halts rare earth exports after new controls, raising global supply concerns

This article was written by Eamonn Sheridan at www.forexlive.com.

US government has indefinitely banned Nvidia from selling H20 chips to China:

• Nvidia expects US$5.5 billion charge related to this for this quarter

After hours trade in NVDA has the shares limit down

This article was written by Eamonn Sheridan at www.forexlive.com.

more to come

Measured remarks from Bank of America ICYMI:

Bank of America CEO Brian Moynihan:

• “we potentially face a changing economy in the future”
• US consumers still spending, keep “pushing money into the economy”
• business clients “remain profitable, liquid and have strong results”
• We continue to watch for signs the environment is changing

Bank of America CFO Alastair Borthwick:

• “Our research team at this point doesn’t believe we’ll see a recession, and our clients continue to show encouraging signs.”
• “Our research team are still calling for modest growth,”
• ” they think that some of the uncertainty may lead to a slowdown in the economy before it picks back up, but that would be very similar to things like the blue-chip consensus at this point, and similar to what Chairman Powell has said”

BoA is, nevertheless, building up precautions. It set aside US$1.48 bn in credit provisions for potential future losses, over 12% more than it set aside a year ago.

This is the read in Chinese state media. No love lost.

This article was written by Eamonn Sheridan at www.forexlive.com.

• Crude oil little changed in trading today for the second consecutive day
• Preview: The market is evenly split on a Bank of Canada rate cut on Wednesday
• White House says some trade deals to be announced ‘very soon’
• Amazon is concerned about 3rd party sellers due to tariffs
• European indices close higher. German Dax shares rise despite lower ZEW confidence
• Eyes on the global freight market as ocean bookings plunge
• Deutsche Bank downgrades US 2025 GDP forecast to +0.9%
• BoA CEO: Consumer spending hasn’t slowed yet
• Canadian housing starts slowed further in March
• Canada March CPI +2.3% y/y vs +2.6% expected
• US March import prices -0.1% vs +0.0% expected
• Empire manufacturing index for April -8.10 versus -14.50 estimate
• UK jobs data sends conflicting messages to Bank of England
• Trump: All necessary permits will be expedited to Nvidia
• Forexlive European FX news wrap: Markets await new info on trade negotiations

Another quiet day in the US session. US Empire Manufacturing data showed some weakness especially with the 6 month forward index falling below Covid levels indicative of the uncertainty from the new administration. However, the market is more accepting of the survey type data. There is always the chance of a headline reversing the negative trend from tariffs. Of course it could go the other way as well.

The EURUSD moved lower today on the back of comments that tariff talks were not progressing. The German ZEW data was also weaker than expectations ahead of the US open. Technically, the price decline fell below support defined by a swing level and retracement at 1.1271 to 1.1276, but stalled short of the rising 100 hour MA (at 1.1256 currently and moving higher).The low price reached 1.12634 and is currently trading at 1.1281. Sellers could not keep the momentum going…..today at least.

THe GBPUSD moved higher and traded to the highest level since October 2024 up to 1.3252, but backed off the pair is trading at 1.3229 which is still up 39 pips or 0.27% on the day.

The USDCHF was the biggest mover with a gain of 1.10% or 0.90 pips on the day. That has the price moving away from the low from Friday near 0.8100 and closer to the falling 100 hour MA at 0.82506. The high price today reached 0.8235 so far today. A move above the 100 hour MA and staying above is needed to give the buyers a small victory from a technical perspective but with other hurdles after the sharp move lower in April that has seen the price moved from 0.8850 to the low of 0.8100 on Friday in less than 2 weeks of trading.

The USDCAD ahead of the BOC rate decision tomorrow, bottomed near the low of a swing area between 1.3843 to day before bouncing higher. The key 200 day MA looms above at 1.4000 level. The price fell below the 200 day MA last week for the first time since October 2024. A move back above that moving average would disappoint the sellers.

US stock indices fell today in up-and-down trading:

• Dow industrial average fell -155.83 points -0.38% at 40368.96.
• S&P index fell -9.34 points or -0.17% at 5396.63
• NASDAQ index fell -8.32 points or -0.05% at 16823.17.

Although Nvidia did rally 1.35%, Metafell -1.87%, Microsoft felt -0.54%, Alphabet fell -1.74%, Amazon fell -1.39% and Apple fell -0.19%.

In the US debt market, yields fell modestly after trying the upside earlier today. Yesterday the 10 year fell over 10 basis points today the 10 year is down an additional 3.3 basis points. A look at your curve shows:

• 2 year yield 3.847%, +1.5 basis points
• 5-year yield 3.980%, -1.8 basis points
• 10 year yield 4.331%, -3.3 basis points
• 30 year yield 4.779%, -1.8 basis points

Looking at other instruments:

• Crude oil traded in a modest range for the second consecutive day the price trading down around $0.20 at settlement.
• Gold rose $18.07 or 0.56% to $3228.70
• Silver fell 6 cents or -0.21% to $32.28
• Bitcoin fell $-600 to $83,980

Tomorrow the Bank of Canada interest rate decision will be announced at 9:45 AM ET. The OIS market pricing is for a 45% chance of a rate cut and a 55% chance of no change. Flip a coin for a preview see Adam’s post by clicking here.

Fed chair Powell will speak at 1:30 PM ET. The market will be instead and what he has to say.

This article was written by Greg Michalowski at www.forexlive.com.

Trump spekain on Fox, on his tariff pause:

• was because it’s a transition
• came from need for flexibility
• may want countries to choose between US or China

We all know why the pause.

This article was written by Eamonn Sheridan at www.forexlive.com.

Q1 2025 economic growth data from China is expected to have slowed from Q4 2024. As the trade war bits it’ll probably slow even further. UBS have a dour outlook:

• UBS has cut its China GDP growth forecast to 3.4% for 2025

The headline March data is expected to be stable apart from a small tick up for retail sales. Yesterday we had March trade data.

• China March dollar-denominated exports +12.4% y/y

I took the improvement in exports as indicative of ‘front loading’ ahead of higher tariffs. A hiccup in my narrative is that exports to the US were not overly strong.

This snapshot from the ForexLive economic data calendar, access it here.

The times in the left-most column are GMT.

The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.

This article was written by Eamonn Sheridan at www.forexlive.com.

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

This article was written by Eamonn Sheridan at www.forexlive.com.

It was a quieter day on the tariff front, though there was a concerning report highlighting a lack of progress between the US and EU on tariffs.

Closing changes:

• S&P 500 -0.2%
• Nasdaq Comp flat
• DJIA -0.4%
• Russell 2000 +0.1%
• Toronto TSX Comp +0.75%

After hours, shares of United Airlines are up 8% after reporting earnings. The company forecast a midpoint of $12.50 in EPS in a continued growth scenario and $8 in a recession.

This article was written by Adam Button at www.forexlive.com.

The latest Bank of America fund manager’s survey is out and this is the headline-grabbing chart. It’s a survey of global investors asking them if they plan to cut their weighing of US equities and it shows that 65% want to be underweight.

Now that may turn out to be a contra indicator as it’s been US equities that have driven global markets higher for the past five years, largely due to tech companies. But those companies are richly valued and are vulnerable to tariffs and potential retaliation from trade partners. Global equities are also much cheaper and that provides some downside protection in a slowing global economy.

More importantly, the survey may highlight a newfound determination to leave or lighten up on USD assets.

Deutsche Bank today highlights the vulnerability:

• Foreigners own
  $7 trillion of American fixed income and $18 trillion of American equities
• The value of equity ownership has risen 6x since 2010
• European portfolio holdings of US equities have risen from 5% to 20% since 2010
• They note that unhedged FX exporse to US assets is very high

The more benign interpretation of our analysis is that
foreigners have merely passively tracked rising aggregate valuations of US
equities and issuance of US bonds. The more worrying interpretation is that
this has left foreigners – especially Europeans – with a huge overweight in
their portfolios relative to history, especially in US equity markets which
tend to be currency unhedged.

This article was written by Adam Button at www.forexlive.com.