[TOKYO] The safe-haven Japanese yen gained on Monday (Mar 31) while gold pushed to a fresh peak as uncertainty around tariffs clouded the outlook for US inflation and economic growth and kept traders away from risky assets, as well as the dollar.
Markets are nervous ahead of a new round of reciprocal levies that the White House is due to announce on Wednesday. Details are scarce, but US President Donald Trump said late on Sunday that essentially all countries will be slapped with duties this week.
The yen strengthened to 148.7 per US dollar at one point on Monday, and was last 0.37 per cent stronger at 149.280. The Japanese currency rallied 0.82 per cent on Friday, when US data showed core inflation rose more than expected last month, fuelling fears of stagflation.
“I think only one thing can be said with certainty is that the uncertainty will not end with the announcement of the reciprocal tariffs by Trump on the 2nd of April,” said Jane Foley, head of FX strategy, at Rabobank.
Gold pushed to an unprecedented US$3,128.06, marking three consecutive sessions registering record highs.
The euro eased 0.11 per cent to US$1.0821, though it is set for a roughly 4.5 per cent rise this quarter, its biggest jump since the third quarter of 2022, thanks to Germany’s fiscal overhaul.
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The likely implementation of tariffs imposed by the United States means Europe will have to take better control of its future, European Central Bank (ECB) head Christine Lagarde said on Monday, reiterating the impact of tariffs and tit-for-tat measures on the bloc’s growth.
On Friday, Trump had said he was open to carving out deals with countries seeking to avoid tariffs, but the Washington Post reported at the weekend he was urging his advisers to take a more aggressive stance.
“Across-the-board tariffs would be a negative surprise, in our view,” Merrill Lynch analysts Michalis Rousakis and Claudio Piron wrote in a research note.
The US dollar index, which measures the currency against six major peers, trod water at 104.01.
“This week is quite a big data week for the US, particularly with payrolls data at the end of the week and it seems that the market is a little bit reluctant to buy the dollar,” Foley said.
US non-farm payrolls data is due on Friday.
As tariffs roil the global economy, Goldman Sachs raised the probability of a US recession to 35 per cent from 20 per cent. It also projected three interest rate cuts each from the US Fed and the ECB from its previous expectation of two each.
Elsewhere, the pound rose 0.19 per cent to US$1.2955 and is set for a nearly 3 per cent monthly climb – its best since November 2023.
A British government spokesperson said Prime Minister Keir Starmer and Trump had “productive negotiations” towards a trade deal in a phone call on Sunday. Still, Britain expects to be hit by global tariffs this week.
The Canadian dollar eased to C$1.4347 per greenback. Mexico’s peso slipped to 20.3808 per dollar.
The Aussie eased 0.6 per cent to US$0.6252 on Monday, ahead of the Reserve Bank of Australia’s (RBA) policy meeting on Tuesday. REUTERS
