Market Highlight 14.05.2025

U.S inflation cooled more than expected in April, though newly imposed tariffs are anticipated to gradually feed through and drive prices higher in the coming months. On a year-over-year basis, the Consumer Price Index (CPI) rose just 2,3% last month - the lowest reading in 4 years. This figure came in below the consensus forecast of 2,4% and marked a slowdown from March’s annual rate. A sharp decline in gasoline prices compared to the same period last year contributed to the subdued inflation. April proved to be a particularly volatile month for President Donald Trump’s trade policy, as businesses struggled to adjust to a barrage of rapidly evolving tariff announcements from the White House. Early in the month, President Trump unveiled a 10% baseline tariff on all imports, alongside reciprocal tariffs targeting a group of 60 countries. While many of those measures were later delayed by 90 days, the U.S still raised tariffs on Chinese imports to a record 145%. However, in a surprise move earlier this week, the U.S and China agreed to temporarily scale back a significant portion of those tariffs on each other’s goods.

The USD Index declined by 0,83% on the day following the release of the weaker-than-expected inflation data. The greenback has now fallen nearly 3% from its April 2 level, when President Trump first announced reciprocal tariffs - a move that prompted foreign investors to reduce their holdings of U.S equities and Treasuries. Easing trade tensions between Washington and Beijing have somewhat alleviated recession concerns for the U.S economy, and markets now increasingly expect the Federal Reserve to begin lowering interest rates as early as September.

Domestically, the USD/VND interbank rate fell to around 25.945 on Thursday morning, supported by modest FX inflows, before closing the day at 25.965. The exchange rate is projected to edge lower during today’s session, potentially nearing 25.900, following continued weakness in the USD in global markets.

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