IEA Cuts 2025 World Oil Demand Growth Forecast on Trade Tensions

Global investment banks are lowering their projections for China's economic growth this year as U.S. President Donald Trump's aggressivetariffsare expected to take a toll on the world's second-largest economy.

Some of the banks had upgraded their forecasts for China just a month ago, encouraged by signs of improvement in the sputtering economy in the first two months of the year.

Sino-U.S. trade tensions have intensified after Trump announced reciprocal tariffs on April 2, leading to tit-for-tat duties on each other's goods. By April 11, China was all but under a U.S. trade embargo as tariffs rose to 145%.

Gross domestic product growth in the first quarter is forecast at 5.1% year-on-year, while full-year expansion is predicted to hit 4.5% in 2025, compared with last year's 5.0% pace, according to a Reuters poll, falling short of the official target of around 5.0%.

China is due to release its first-quarter GDP data and activity indicators on Wednesday.

Here is a summary of some forecasts for the China's GDP.

** In the previous factbox, some of the institutions raised their GDP forecast for this year following some early signs of economic recovery.

KEY QUOTES:

** UBS

"Under our current new baseline assumptions, we estimate tariff hikes this year to pose a more than two-percentage-point drag on China's GDP growth. We expect China's exports to the U.S. to fall by 2/3 in the coming quarters and its overall exports to fall by 10% in USD terms in 2025, the latter also takes into account slower U.S. and global growth.

While tariff exemptions will likely reduce the inflationary pressure somewhat in the U.S., we expect they are unlikely to affect importers' desire to find alternatives to imports from China. Therefore, we expect continued negative impact of the tariff hikes on China's exports in 2026."

** CITI

"We see little scope for a deal between the U.S. and China after recent escalations.

Domestic policies could focus more on demand expansion. We expect additional funding of 1 to 1.5 trillion yuan ($205 billion) while policy implementation accelerates. The People's Bank of China (PBOC) could cut policy rates by 40 basis points and reserve requirement ratio (RRR) by 100 basis points. Policy constraints such as the exchange rate and debt management could stay, however. With prolonged elevated uncertainties, policymakers could choose to keep more powder dry."

** GOLDMAN SACHS

"Recent events have underscored the speed with which President Trump can alter tariff rates, while also highlighting the likelihood that high tariffs on Chinese goods will persist.

We estimate that 10 to 20 million workers in China may be exposed to U.S.-bound exports. The combination of extremely high U.S. tariffs, sharply declining exports to the U.S., and a slowing global economy is expected to generate substantial pressures on the Chinese economy and labor market."

Source: TradingView

Unemployment held steady at 4.4%, where it has been since last November, while employment rose by a better-than-expected 206k on a rolling 3-month basis.

Meanwhile, earnings continued to increase at a rapid clip, albeit somewhat softer than consensus. Overall pay rose 5.6% YoY, and regular pay by 5.9% YoY over the same period. While one old hope that earnings pressures fade somewhat as the year progresses, this is by no means guaranteed, even if risks to the labour market are biased towards weakness, as the impacts of the National Insurance changes are felt from Q2 onwards. Right now, though, the current clip of pay growth is clearly incompatible with a sustainable return to the BoE's 2% inflation target over the medium-term.

In any case, though, policymakers on Threadneedle Street are unlikely to place much weight on this morning's figures. While well-documented issues continue to plague the unemployment data, the earnings series is now also subject to question marks, and potential revisions, given late pay data submissions. At the present rate, the ONS seem unlikely to have got their house ‘in order' until the tail end of next year at the earliest.

Taking that into account, it's tough to imagine today's data materially changing the policy outlook for the ‘Old Lady'. A 25bp cut at the next meeting in early-May remains nailed on, with further such cuts likely to be delivered on a quarterly basis over the remainder of the year, as headline CPI remains on a path towards 4% over the summer.

That said, risks to the outlook do now tilt in a distinctly more dovish direction, as downside growth risks continue to mount, chiefly as a result of President Trump's numerous tariff announcements. Were policymakers to become confident that the risks of inflation persistence had sufficiently abated, a more rapid pace of normalisation could be delivered. Tomorrow's March CPI data will, hence, be considerably more impactful in moving the needle for the BoE.

Source: Pepperstone

China Suspends Rare Earth Exports Amid U.S. Trade Tariffs

Experts emphasize the move highlights China's strategic use of its dominance in rare earth production, potentially complicating global supply chain protocols.

The Chinese government halted exports of rare earth minerals, citing retaliation for U.S. tariff hikes on tech products. This action affects companies like Tesla, Apple, and military firms relying on critical resources.

President Donald Trump has imposed significant tariffs on Chinese goods, while a new Chinese licensing system is expected to cause further supply delays. Analysts worry global entities will be scrambling for alternatives as disruptions are anticipated.

American manufacturers and defense firms face increased costs due to limited U.S. rare earth reserves. Industrial disruptions may increase volatility in ETFs tied to rare earth materials.

The suspension affects multiple industries globally and could lead to immediate price increases. Historically, such actions have caused major fluctuations in related markets.

Companies worldwide may seek alternative sources, which could lead to increased demand for rare earth resources outside China. Past precedents indicate slow development of new supply chains and potential long-term shortages.

Analysts note a potential uptick in resource-driven inflation impacting broader markets and investor actions. The U.S. may enhance its strategic stockpiles or diversify through partnerships with other nations.

Source: CryptoSlate

The AUDUSD is once again flirting with its 100-day moving average, currently near 0.62917, and the risk is that history repeats. The last two breaks above this key technical level failed to hold, both stalling at 0.6390 before rotating back lower. Today’s attempt showed even less momentum, with the high reaching just 0.6340 before sellers leaned in and the pair reversed.

If the pair can't hold above the 100-day MA, attention will shift back toward downside support targets. The first is the 200-hour moving average at 0.6259, followed by the 100-hour moving average at 0.6220. A move below both would confirm that the recent break was another false start—and place sellers firmly back in control.

The technical picture remains precarious. Buyers need to not just break the 100-day MA, but sustain momentum above it. Without that, the bias stays bearish and the AUDUSD may just be “doing it again.”

Key levels:

• Resistance: 0.62917 (100-day MA), 0.6340, 0.6390

• Support: 0.6259 (200-hour MA), 0.6220 (100-hour MA)

AUDUSD technicals.

Source: ForexLive