Ahead Today
G3: US Retail Sales, US Industrial Production
Asia: China Retail Sales, Industrial Production, GDP
Market Highlights
The Trump administration imposed new export restrictions on Nvidia’s H20 chips to China, highlighting the company would require a license to export to China for the indefinite future, with concerns that “the covered products may be used in, or diverted to, a supercomputer in China”. Meanwhile, China imposed its own restrictions on purchases on Boeing aircraft and also related aircraft parts, as such raising the tit-for-tat retaliation between the two powers further. While the US White House Press Secretary said that “the ball is in China’s court” in terms of making the first move and offer, China would most certainly want any genuine negotiations to take place on equal footing rather than on any unilateral conditionality (as should be the case between two great powers).
Meanwhile, President Trump launched a probe into the need for tariffs on critical minerals, citing national security and resilience concerns. The probe will investigate the impact of imports of critical minerals, including rare earth elements and uranium on America’s security and resilience, with tariffs likely to be imposed replacing the current reciprocal tariffs. Looking ahead, markets will focus on China’s monthly macro data together with US retail sales and industrial production data.
Regional FX
Overall, risk sentiment was somewhat slightly better with gold making further higher, while Asian currencies were mixed against the Dollar. USD/CNH remained around 7.321 levels, while THB (+0.6%), and SGD (+0.13%) outperformed. India released its CPI and trade deficit numbers for the month of March. Inflation numbers were lower than expected at 3.3% from 3.6% previously (vs consensus expectations of 3.5%yoy). Overall, this further confirms our view that the RBI will continue to pivot towards growth. We have a call for a further 50bps of rate cuts by the RBI with risks titled towards more rather than less cuts. Meanwhile, India’s trade deficit rose to US$21.5bn from US$14bn previously, with stronger imports activity outweighing some short-term pickup in exports growth. We will have China’s monthly data such as retail sales, industrial production and GDP numbers out later today. We will unlikely get the impact of the tariffs on China’s economy just yet, but any downside surprise could likely raise expectations for further stimulus from Chinese authorities.
