Market Highlight 11.04.2025

U.S consumer prices fell in March for the first time in nearly 5 years, offering a momentary relief for households concerned about inflation. However, economists caution that the trend may prove short-lived given the potential inflationary impact of recently announced trade tariffs. Specifically, the Consumer Price Index (CPI) dropped to an annual rate of +2,4%, below the earlier forecast of +2,6%. A sharp 6% decline in gasoline prices was the primary contributor to the cooling inflation. Hotel accommodation rates and airline fares also registered significant drops, signaling that many Americans may be scrapping travel plans - often the first discretionary expense to be cut when economic uncertainty rises. U.S equity markets rallied sharply on Wednesday after President Donald Trump announced a 90-day suspension of newly imposed retaliatory tariffs. However, by late Wednesday evening, market sentiment shifted away from the softer inflation data and refocused on the broader economic damage from the escalating U.S - China trade war. This renewed anxiety helped drive the USD sharply lower, with the USD Index dropping nearly 2% during the session. The latest round of tariffs - imposing a 125% duty on Chinese imports - took effect immediately after Beijing announced an 84% retaliatory tariff on U.S goods. The cumulative increase in U.S tariffs on Chinese imports has now reached 145% year-to-date in 2025.

The interbank USD/VND exchange rate cooled rapidly to 25.760 by the end of trading on Wednesday, supported by the positive market response to the U.S government’s decision to delay its reciprocal tariffs by 90 days for most trading partners, including Vietnam. A steep decline in the USD on global markets has helped offset renewed concerns over economic fallout as the U.S - China trade conflict continues to escalate. The exchange rate is expected to extend its decline in early trading today, with the USD/VND pair forecast to fluctuate within the range of 25.650 - 25.800.

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