Yen Slides as Tariffs Keep BOJ on Hold, Dollar Steady

Economic

Summary:

The yen fell as the BOJ downgraded growth forecasts and signaled a dovish outlook. The dollar steadied amid easing trade tensions and focus on upcoming U.S. jobs data.

The yen slid on Thursday as the Bank of Japan (BOJ) lowered growth forecasts in light of U.S. tariffs and left rates on hold, while investors watched for signs of the trade war cooling and awaited U.S. labour market data.

The yen dropped by as much as 1.1% to 144.74 per dollar, its weakest since April 10. It was last at 144.23 per dollar.

The BOJ's decision hold on interest rates was unanimous and anticipated, but investors saw the downgraded outlook as reducing the likelihood of future hikes.

"It was no surprise that they revised both the growth and inflation down but both were significantly more than the market had expected," said Mohamad Al-Saraf, FX research associate at Danske Bank.

"The signals were clearly more dovish than expectations."

The BOJ now expects underlying consumer inflation to reach levels consistent with its 2% target around the latter half of fiscal 2026 and onward, pushing back the timing by around a year from its previous projection in January.

In a press conference after the meeting, BOJ Governor Kazuo Ueda said there was no need to raise rates in haste when underlying inflation was stalling.

Money market traders were now pricing in just 11 basis points of tightening by the end of the year, down from around 16 basis points before the meeting.

DOLLAR STABILISES

The dollar has so far been one of the bigger casualties of the trade war as President Donald Trump's flip-flopping tariffs have hit growth expectations and rattled confidence, notching its largest monthly fall for 2-1/2 years through April.

But the greenback has come off lows as Trump has suspended much of his tariff barrage and hinted at deals, including with China, which has been hit with the highest U.S. import levies.

The dollar was mostly steady against other major currencies apart from the yen on Thursday. The euro was little changed after earlier touching a two-week low of $1.1288 and sterling was flat at $1.3335. Most European markets were closed on Thursday for the May Day holiday.

"We're in a window here where we're on a de-escalation path, and there are some de-escalation trades around it," said Richard Franulovich, Westpac's head of currency strategy in Sydney.

Trump said on Wednesday that he had "potential" trade deals with India, South Korea and Japan and that there was a very good chance of reaching a deal with China.

U.S. Trade Representative Jamieson Greer had said earlier on Wednesday that no official talks were happening with China although Yuyuan Tantian, a social media account affiliated with Chinese state broadcaster CCTV, said the Trump administration had approached China seeking discussions.

A surge in imports to front-run tariffs dragged U.S. GDP into contraction mode in the first quarter, data showed on Wednesday, though some economists took resilient private demand as a positive sign.

Jobless claims and the ISM manufacturing survey are due later on Thursday, although April labour market figures on Friday will be the next piece of hard data that markets will use to gauge recession risks.

Expectations are for a slowdown in U.S. hiring to 130,000.

"It will be interesting to see how markets react if we see a notable surprise because U.S. data hasn't played a role for the whole of April," Danske Bank's Al-Saraf said.

"If we look at market reactions, the dollar has not really moved with the U.S. data."

The Australian dollar dipped slightly against its strengthening U.S. counterpart after a bumper April that saw it notch a multi-month peak.

The Aussie was last at $0.6391, having recently found support after a slightly hotter-than-expected inflation reading toned down some of the more dovish bets on the rates trajectory. The New Zealand dollar held its ground at $0.5926.

Source: Reuters

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Michelle

Economic

Commodity

Gold fell more than 2% to a two-week low on Thursday, weakened as signs of easing trade tensions enhanced risk appetite and reduced bullion's safe-haven appeal, while a stronger U.S. dollar also weighed on prices.

Spot gold fell 2.1% to $3,219.57 an ounce as of 0957 GMT, after hitting its lowest since April 15.

U.S. gold futures lost 2.8% to $3,227.20.

The dollar index (.DXY), opens new tab rose 0.4%, making dollar-denominated gold more expensive for buyers holding other currencies.

"There is ongoing hope that some trade deals are signed soon allowing lower tariffs to stay," said UBS analyst Giovanni Staunovo, adding that this optimism, combined with a stronger dollar, is exerting pressure on the gold.

U.S. President Donald Trump said on Wednesday trade deals were possible with India, Japan and South Korea. He also said there was a "very good chance" of a deal with China.

The U.S. has approached China seeking talks over Trump's 145% tariffs, a social media account affiliated with Chinese state media said.

The U.S. economy contracted for the first time in three years in first quarter, weakened by a surge of imports as businesses sought to pre-empt the imposition of higher tariffs.

However, Federal Reserve policymakers indicated that short-term interest rates would remain unchanged until there are clear signs of inflation nearing the central bank's 2% goal or potential job market deterioration.

Investors await Friday's nonfarm payrolls report for further insight into the Fed's policy direction.

"A weaker payroll report should support calls for more rate cuts by the Fed this year and allow gold to move back to $3,500/oz over the coming months," said Giovanni Staunovo.

Analysts in a quarterly Reuters poll have forecast an average annual gold price above $3,000 for the first time.

Gold, a non-yielding metal considered a hedge against political and financial turmoil, briefly hit $3,500 last week.

Spot silver fell 1.5% to $32.11 an ounce, platinum shed 0.2% to $965.10 and palladium was up 0.9% to$946.08.

Source: Reuters

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Glendon

Economic

Forex

(May 1): Janet Yellen warned that the risk of a US recession has “gone way up” after Donald Trump’s sweeping tariffs rattled financial markets, consumers and businesses.

The former Federal Reserve (Fed) chair said in an interview with the Financial Times that the tariffs on major trading partners will have “tremendously adverse consequences” for American consumers and firms.

“I am not yet ready to say that I’m forecasting a recession, but certainly the odds have gone way up,” Yellen said. She added that targeting Chinese goods could “hobble” American industries by curtailing the supply of critical minerals.

Her comments came after figures on Wednesday revealed that the US economy contracted in the first quarter as firms boosted imports to stockpile goods before the April 2 tariffs announcement. The 0.3% drop in gross domestic product on an annualised basis was the US’s worst quarterly performance in three years.

Yellen — who also served as the Treasury secretary under Joe Biden — is the latest to warn of a rising risk of recession after US business and consumer confidence surveys tumbled in response to the tariffs.

While Trump has handed many countries a temporary reprieve from the highest tariffs first unveiled last month, the US president remained defiant on Wednesday, saying the turbulence seen in markets has “nothing to do with tariffs”.

Yellen warned that the US is “highly dependent on China for most of the critical minerals that go into clean energy technologies, batteries and the like”.

“By putting enormous tariffs on them, I think we potentially hobble industries that could have a chance,” she said.

Source: Theedgemarkets

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Gerik

Commodity

Economic

Gold Retreats as Risk Sentiment Improves

On Thursday, gold prices dropped sharply, retreating from recent highs as investor sentiment turned more optimistic on signs that trade tensions between the U.S. and key partners may be easing. Spot gold declined 2.1% to $3,219.57 an ounce—its lowest level since April 15—while U.S. gold futures slipped even more, down 2.8% to $3,227.20. This pullback follows a brief rally last week when gold prices had surged near $3,500 amid geopolitical uncertainty and fears of a hardline tariff regime under President Trump.

In tandem with improving risk appetite, the U.S. dollar index gained 0.4%, making gold more expensive for holders of other currencies. Since gold is denominated in dollars, its inverse correlation with the greenback often sharpens during periods of currency volatility. Analysts attribute the recent strengthening of the dollar to optimism surrounding trade diplomacy, as well as resilience in U.S. consumer demand despite the broader contraction in first-quarter GDP.

Trump’s Trade Posture Eases, Fueling Market Optimism

Investor mood shifted after President Trump announced a “very good chance” of securing trade agreements with countries like India, South Korea, and Japan. His administration has also reportedly approached China for potential dialogue concerning the recently proposed 145% tariffs. These developments have sparked hopes of de-escalation in the trade war, leading to increased risk-on behavior in global markets, which typically diminishes gold’s appeal as a protective asset.

UBS analyst Giovanni Staunovo noted that “hope for near-term trade deals and a stronger dollar are both working against gold right now,” while cautioning that sentiment could shift quickly depending on labor market data and Fed communications.

Macroeconomic Contrasts and Fed Watch

Paradoxically, while trade optimism has supported the dollar and equities, the broader U.S. economy showed signs of stress, with the first quarterly contraction in GDP since 2022. This decline was primarily driven by a surge in imports, as firms front-loaded purchases to avoid pending tariff hikes. Despite this, the Federal Reserve appears poised to hold interest rates steady unless inflation falls convincingly toward the 2% target or the labor market weakens substantially.

All eyes are now on the nonfarm payrolls report due Friday. A softer-than-expected reading could reignite expectations of Fed rate cuts later this year—potentially reversing recent losses in gold. “If the labor market shows signs of cooling, gold may rebound toward $3,500 over the coming months,” Staunovo added.

Gold Still Poised for Strong Annual Performance

Despite the recent dip, analysts remain broadly bullish on gold over the long term. A quarterly Reuters survey forecasts the average gold price to exceed $3,000/oz for the first time annually, reflecting continued demand for portfolio hedging amid lingering economic and political uncertainty. Last week’s brief rally toward $3,500 remains a key psychological benchmark for bulls, who see potential for renewed upside if rate cut speculation builds.

Silver prices also fell in Thursday’s session, declining 1.5% to $32.11 per ounce. Platinum eased slightly by 0.2% to $965.10, while palladium bucked the broader trend, gaining 0.9% to settle at $946.08. Like gold, these metals remain sensitive to both currency dynamics and industrial demand outlooks.

The current pullback in gold appears closely tied to shifting market expectations around trade diplomacy and U.S. economic resilience. However, the underlying macro backdrop—including tariff uncertainty, a contracting GDP, and mixed labor data—suggests that gold’s safe-haven role may soon be back in focus. While easing trade tensions may temper near-term demand, gold’s structural drivers remain intact, especially if Fed rate cuts reenter the conversation.

Source: Reuters

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Michelle Reid

Political

Elon Musk said Wednesday he’s considering sending his federal efficiency unit to investigate the Federal Reserve after discovering the central bank is spending $2.5 billion on its headquarters renovation in Washington, DC.

Elon made the statement inside the White House’s Roosevelt Room, where he told reporters:

“Since at the end of the day, this is all taxpayer money, I think we certainly — we should definitely — look to see if indeed the Federal Reserve is spending two and a half billion dollars on their interior designer.”

The renovation project, which began in 2021, has seen its costs shoot up as the Fed blamed rising prices of construction materials and labor. The total now sits at $2.5 billion. “That’s an eyebrow-raiser,” Elon added.

His comments came just hours before the Wall Street Journal reported that Tesla’s board had started working with a search firm to find the company’s next CEO. Robyn Denholm, chair of Tesla, later denied the report on X, calling it “absolutely false.”

Elon was in Washington to highlight his Department of Government Efficiency or DOGE, just a week after telling investors he’d spend less time in the capital and return focus to Tesla amid sliding sales and a declining stock price.

He used the moment to take aim at the Fed, a private entity that doesn’t take money from Congress but instead operates using profits from assets it holds. But in recent years, the Fed has been losing money due to rising interest costs and hasn’t been able to send profits back to the Treasury.

Trump’s DOGE team targets federal costs

Elon’s push to examine the Fed comes as part of a broader strategy under President Donald Trump, who put him in charge of DOGE in January. Since then, his teams have gone from agency to agency looking for waste, cutting staff, closing programs, and digging through sensitive databases.

The Fed, including its Board of Governors and 12 regional banks, holds confidential data about banks and monetary policy that Elon’s people could soon access.

His team’s methods have drawn heavy fire. At the Social Security Administration, DOGE’s access to internal systems caused portal crashes. Critics say Elon is careless with sensitive information and uses weak security protocols.

But he defended the work, saying DOGE needs the data to track down $162 billion in improper payments every year. He explained fraud thrives because government databases aren’t connected.

“There’s something like 20 million people marked as alive who are not — now, most of those people were not receiving Social Security. Some of them were, but most of them were not,” Elon said. “Dead people should not be receiving unemployment insurance. They’re employed in the afterlife?” He pushed back on the surveillance accusations, calling the process simple data reconciliation.

A federal appeals court on Wednesday blocked DOGE from accessing personal data at Social Security, citing Elon’s own comments that the program is a “Ponzi scheme” as proof it’s a political target of the Trump administration.

DOGE trims workforce and reorganizes hiring

DOGE is also shaking up the federal workforce. One of Elon’s signature efforts is the “Fork in the Road” resignation plan. It gave eligible workers a chance to resign by February and still be paid through September. Around 80,000 employees signed up. By the end of April, about three-quarters had officially left. Agencies spaced out the exits to avoid service disruptions.

“You didn’t wake up one day with 100,000 people leaving the workforce. They are rolling off in a steady manner. That was by design,” said Anthony Armstrong, DOGE deputy and adviser to the Office of Personnel Management.

He said many agencies have continued buyouts, calling the latest offers “rolling forks.” The second wave of volunteers is more than double the first, and Armstrong expects final numbers to reach into the “hundreds of thousands.”

Though cuts have been deep, Armstrong said they’re mostly voluntary. About 80% of the reductions came from resignations and early retirement offers. Only 20,000 workers have been fired using formal layoffs, while 26,000 new hires have filled essential jobs despite an ongoing freeze. “We’ve actually hired more people than have actually been fired at this moment,” he said.

Source: Cryptopolitan

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Gerik

Economic

Inflation Softens Ahead of Tariff Impact

Data released by the U.S. Commerce Department on April 30 shows inflation eased in March, providing a temporary sense of relief before the full impact of newly introduced tariffs takes hold. The Personal Consumption Expenditures (PCE) index — the Federal Reserve’s preferred inflation gauge — rose 2.3% year-over-year, the lowest increase since autumn 2023. Core PCE, which excludes food and energy, increased 2.6%.

While these figures matched analysts’ expectations, they do not yet reflect the effect of 10% general tariffs and higher rates on Chinese goods that took effect in early April. The lag between policy implementation and its effect on consumer prices means inflation may rise again in the coming months.

Resilient Consumer Spending Signals Economic Strength

Despite a slight dip in first-quarter GDP, other economic indicators showed underlying strength in domestic demand. Personal spending rose 0.7% in March, while overall consumer expenditures climbed 0.5%. These figures suggest that Americans continue to spend confidently, even amid trade uncertainties and geopolitical risks.

This creates a dilemma for the Fed. On one hand, softening inflation might justify policy easing. On the other, steady spending and growth may encourage a more cautious approach, especially if tariffs rekindle inflation in the second quarter.

Is a Fed Rate Cut Near? Possibly — But Not Guaranteed

With inflation moderating, some investors are increasingly confident the Fed will lower interest rates later in 2025. However, this decision hinges on whether the inflationary pressures from tariffs prove temporary or more persistent. If rising import costs lift prices broadly while slowing demand at the same time, the U.S. economy may face a situation resembling stagflation.

Fed officials will closely monitor upcoming data, especially related to labor markets and consumer behavior. Any signs of weakening job growth or a decline in household confidence could tilt the balance in favor of monetary easing.

March’s data gives the Fed some breathing room, but not a green light. The central bank remains in a “wait and see” mode, balancing encouraging inflation numbers with the unknown effects of tariff-driven cost increases. Markets, too, remain cautious — hopeful for rate cuts, but aware that policy shifts will depend on sustained evidence of inflation control in the months ahead.

Source: Reuters

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Gerik

Economic

American Buyers Eye European Real Estate Amid Policy Uncertainty

A wave of U.S. capital is flowing into European real estate, driven by concerns over escalating trade tensions and unpredictable policy changes under President Trump. One of the most striking examples of this trend is Switzerland’s Andermatt ski village, which has seen a sharp surge in interest from American buyers. According to Russell Collins, Chief Commercial Officer at Andermatt Swiss Alps AG, inquiries from U.S.-based clients in the first quarter of 2025 tripled compared to the same period in 2024, and actual transactions or reservations doubled—despite having zero U.S. buyers just a year ago.

This suggests a clear behavioral shift. American investors are not only diversifying geographically but are also seeking stability in assets denominated in strong currencies such as the Swiss franc and the euro. Professor António Alvarenga of Nova School of Business and Economics notes this trend may reflect a strategic reallocation of wealth into less policy-sensitive markets.

Remote Work as an Enabler of Cross-Border Investment

Beyond economic anxiety, the ability to work remotely has amplified this migration of wealth. According to Graham Hill, a real estate consultant with Find Hokkaido Agents, the rise of dual-income couples with location-flexible careers has made it increasingly viable to relocate to scenic or resort-style areas abroad. Remote work is no longer a fringe option but a structural change that empowers mobility—transforming second homes into primary residences for a growing class of affluent professionals.

However, relocating abroad does not grant Americans immunity from U.S. financial obligations. As Stewart Koesten, President of Aspyre Wealth Partners, points out, U.S. citizens remain liable for income tax regardless of where they reside. Income earned in Switzerland, either through self-employment or entrepreneurial activity, is subject to U.S. taxation in addition to any Swiss levies. This reduces the financial advantage of geographic relocation and underscores the enduring reach of U.S. tax law.

Moreover, Koesten warns that if Trump’s full slate of tariffs takes effect after the current 90-day pause, global equity values could be impacted, interest rates may rise, and U.S. bonds could experience widespread sell-offs. These macroeconomic consequences would likely be felt even in investment havens like Switzerland, limiting the effectiveness of real estate diversification strategies.

A Hedge, Not a Refuge

While moving capital to the Alps may reduce exposure to immediate trade-related disruptions or policy shifts in the U.S., it is not a complete escape from global financial volatility. Andrew Fortune, a real estate advisor at Great Colorado Homes, emphasizes that diversifying through foreign real estate—particularly in politically stable environments like Switzerland—is a rational strategy, but not a guarantee against contagion from U.S.-driven economic shocks.

He argues that while such investments can reduce the influence of one country’s policies on an individual’s net worth, they cannot fully insulate investors from systemic risks. If tariff-induced strain triggers a U.S. recession, the global nature of capital flows ensures that markets like Switzerland would also feel the aftershocks.

The recent increase in American interest in European property reflects a broader shift in investment psychology—one shaped by trade tensions, policy unpredictability, and the growing viability of remote work. While Switzerland offers a stable, attractive option for asset diversification, investors must remain aware that legal and economic linkages to the U.S. remain intact. The move toward European real estate is better viewed as a smart hedge—not an escape hatch.