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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Foreign Exchange Platform]: The risk of economic recession triggers market fluctuations, and the US dollar trend is repositioned." Hope it will be helpful to you! The original content is as follows:
Asian Handicap Market Review
On Monday, after Trump's remarks about the economic recession triggered risk aversion, the US dollar index rebounded and once returned to the 104 mark. As of now, the US dollar is quoted at 103.94.
U.S. Secretary of Energy: U.S. President Trump may cancel tariffs on Canadian oil in April.
Canadian Prime Minister-elect Mark Carney said that as long as US President Trump continues to promote the trade war, Canada will maintain retaliatory tariffs on U.S. products. Ontario, Canada imposes a 25% surcharge on electricity exports to the United States.
The latest consumer expectations survey of the New York Fed shows that short-term inflation expectations in the United States rose in February, medium- and long-term inflation expectations remained stable, and the public's expectations for a worsening financial situation in the next year are the strongest since November 2023.
State in Russia and Ukraine-①Ukrainian officials: Ukraine may propose an air and sea ceasefire with Russia; ②Russian Ministry of Foreign Affairs: Russia and the United States have no plans to hold a new round of talks in Saudi Arabia this week; ③U.S. Special Envoy for the Middle East: Zelensky has apologized to Trump; ④ Sources: U.S. officials are expected to go to Moscow this week and meet with Putin.
The Israeli delegation has set out to Doha to advance the second phase of the Gaza ceasefire negotiations.
German Green Party official Drog: It is recommended that Green Party members not vote for the bill to (increase) spending.
Eurozone March Sentix Investor ConfidenceThe number was -2.9, the highest since June 2024.
Market News: Italy plans to increase its troops by 40,000 by 2033.
Institutional View
Ilya Spivak, Global Macro Head of Tastylive: The US dollar needs to find new momentum to get rid of the congestion range, and the lasting direction of gold is waiting to be restored.
The overall upward trend of the US dollar is still intact. The path with the least resistance is conducive to the upward trend, but the market needs to find new momentum to get rid of the congestion range in order to take action in the short term.
Investors are currently awaiting Wednesday's U.S. Consumer Price Index (CPI) data to analyze the Fed's future interest rate stance. Gold is seen as a tool to hedge against political risks and inflation, but higher interest rates reduce the attractiveness of this yield-free metal. Gold has been stable between 2830 and 2,960 in the past four weeks and it needs to see a avatradescn.compelling breakthrough to conclude that some lasting directional trend is recovering.
ANZ Bank is looking forward to the US February CPI: Real and expected inflation may rebound, mainly due to the impact of...
Overall CPI monthly rate: 0.39%; core CPI monthly rate: 0.32%
We expect the US February core CPI monthly rate reading to be 0.32%. The overall CPI monthly rate may rebound to 0.39%, mainly driven by the rise in food and energy prices.
It should be noted that Trump's tariff policies since February have caused a sharp increase in average tariffs on avatradescn.commodity imports. According to the Tax Foundation, the data has soared from 2.4% in 2024 to 13.8%, reaching its highest level since the late 1930s. In terms of inflation expectations, the University of Michigan's long-term household inflation expectations indicator reached 3.5% in February, the highest level since mid-1990.
Recently, Fed officials continued to stress that it is necessary to wait and see for a long time before considering relaxing their current restrictive policy stance. Factors supporting this decision include high service industry inflation, a solid labor market, the federal funds rate is close to neutral policy levels, and the high uncertainty of the impact of government policies on economic growth and inflation. It is worth noting that uncertainty surrounding tariff policies are having a negative impact on market sentiment and inflation expectations. Several Fed officials have expressed concerns about the rise in inflation expectations and used this as an important basis for maintaining interest rates stable for some time to avatradescn.come. The latest business survey shows that the current high trade policy uncertainty is continuing to spread to real and expected inflation levels. Given the high uncertainty at the government policy level, we have adjusted our expected schedule for the reduction of federal funds rate, and the rate cut cycle is currently expected to restart in the second half of 2025.
Goldman Sachs: If Trump makes this decision, it may significantly push inflation back?
The core PCE price index in the United States in JanuaryThe monthly rate was 0.28%, while the annual rate has dropped from its peak of 5.65% to 2.65%. The core CPI monthly rate in January was 0.45%, and although the annual rate rebounded to 3.29%, it has dropped significantly avatradescn.compared to the peak of 6.63%. Although continuous indicators reflecting potential inflation trends have rebounded in January, the shortage has continued to rise in recent months, and are close to the average growth level before the epidemic.
According to our top-level inflation forecast model under avatradescn.com, after excluding potential tariff policy impacts, the core PCE price index is expected to fall back to 2.1% in December 2025. Although Trump's tariff policy will delay inflation's return to the 2% target, this trend seems to be unstoppable. We expect tariff policies to drive the effective tariff rate in the United States by more than 4 percentage points, resulting in the core PCE price index being 0.4 percentage points higher than our model estimates, which is to reach 2.5% in December. These expected tariff measures will only have a moderate one-time impact, neither preventing inflation levels from falling further this year nor changing the path to continue to move towards the 2% target next year. However, if the larger tariff plan proposed by Trump was finally implemented, it may have a more significant driving effect on inflation, but this is also a one-time impact.
In addition, excluding the impact of potential tariffs, we expect the core CPI annual rate to drop to 2.3% in December 2025, mainly due to the continued narrowing of the contribution of the housing and transportation services sub-items to the upward inflation. However, if the impact of tariff policies is taken into account, the annual core CPI rate may remain at 2.7%.
XTB research director Kathleen Brooks: UK growth risk is on the downward trend, and European stocks may go to a higher level?
The UK's January GDP data released on Friday night has attracted much attention from the market. At present, the market generally expects that the monthly rate will slow down sharply from 0.4% in December last year to 0.1%. It can still achieve positive growth mainly due to the weak recovery of the service industry, with quarterly growth rebounding from stagnation to 0.2%. Sub-item data will show that industrial output, manufacturing and construction activities continue to be weak, which may drag down overall economic performance. Although analysts expect the UK's GDP growth rate in the first quarter of this year will be supported by government spending and consumption, under the cloud of rising national insurance taxes since April, corporate confidence and residents' willingness to consume may continue to be suppressed, and the downward risks of economic growth are intensifying. It is worth noting that the British government announced last week that it would streamline the civil service system and phase out offset personnel through AI technology, while also preparing for the spring fiscal statement prepared for the US's gradual withdrawal from Europe's defense spending, which could significantly cut public spending to vacate fiscal space.Strengthen the national defense budget. With the reconstruction of the global geographic pattern driving the structural growth of defense spending, the European defense sector has become one of the most significant investment themes in the stock market this year. Institutions generally believe that there is still room for upward in this field, especially the policy shift of NATO member states collectively increasing military expenditure to 2% GDP, which is reshaping the profit expectations and valuation systems of related avatradescn.companies.
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