Israeli troops attacked Gaza on a large scale, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on March 18

Global Market Review

1. European and American market conditions

The three major stock index futures fell, with Dow futures mainly blue-chip stocks falling 0.25%; S&P 500 Index https://avatradescn.comFutures fell 0.27%; Nasdaq 100 Index futures, mainly technology stocks, fell 0.35%. European stock markets rose, with the German DAX index rising 1.23%; the French CAC40 index rising 0.43%; and the UK FTSE 100 index rising 0.37%.

2. Interpretation of market news

The Israeli army's large-scale air strike on Gaza, the Israeli Jewish Force Party announced that it would return to the government

On the afternoon of the 18th local time, the Likud Group, one of Israel's main ruling parties, issued a joint statement, saying that the two sides had reached an agreement that the Jewish Force Party would return to the ruling alliance led by the current Prime Minister Netanyahu, and ministers affiliated with the Jewish Force Party will also return to the cabinet. After the first phase of the Pakistan-Israel ceasefire agreement was reached and implemented in January this year, the Jewish Force Party, led by then-Minister of National Security Itamal Ben-Gerville, announced its withdrawal from the coalition government led by Prime Minister Netanyahu.

Russian crude oil flows remained at a high of nearly four months

Russian oil exports remained close to a four-month high before Russian President Putin held talks with U.S. President Trump. During the four weeks ended March 16, crude oil flows at all Russian ports had little change, at 3 per day370,000 barrels, close to the highest level as of November 10 last year. European leaders worry that President Trump may make too many concessions on behalf of Ukraine in a direct dialogue with Putin. If negotiations make progress, U.S. presidential advisers are considering lifting or adjusting sanctions on Russia, including limiting oil export prices, according to people familiar with the matter.

Bond investors lower exposures prepare for the economic slowdown, and the Fed is expected to remain silent

Bond investors are preparing for the U.S. recession, cutting exposures while many extend the lifetime of fixed-income portfolios as the Fed is not expected to resume interest rate cuts. Investors have been extending bond expiration eve on the Fed's meeting. This means buying longer-term assets as expected yields fall further and suggests that the bond market is preparing for a larger rate cut cycle than expected. Market participants said investors have been extending bond expiration for at least the past month. JPMorgan’s latest U.S. Treasury client survey shows that bond investors hold net long U.S. Treasury bonds at their highest level since the fall of 2010. However, this extreme buying and oversight situation may be an anti-indicator, which means that short-term bond yields may rebound. Many analysts said long positions in the bond market may be partly out of concerns about the recession, as the Trump administration continues to impose aggressive import tariffs on U.S. trading partners, launching a global trade war.

Switzerland may avoid Trump's accusations for cautious intervention in the Swiss franc

①Switzerland may avoid becoming the focus of accusations of US President Trump by treating the Swiss franc with caution, rather than weakening the Swiss franc through intervention. Swiss National Bank (SNB) said on March 18 that it purchased a total of CHF 1.2 billion worth of foreign currency in 2024.

② Data shows that in the fourth quarter of 2024, the Swiss National Bank purchased only 88 million Swiss francs of foreign currency, a period that avatradescn.comes as Trump won his second presidency. This figure is derived from the total amount of foreign currency purchases of CHF 1.2 billion in 2024, minus the amount of foreign currency purchases of CHF 281 million, 103 million and 728 million announced in the first three quarters respectively.

③In December 2020, when Trump's first presidency ended, the US Treasury Department listed Switzerland as a exchange rate manipulator. The United States is Switzerland's largest single export market, and Switzerland has a large surplus of goods with the United States.

German investor sentiment improved significantly due to the shift in fiscal policy

①German investor sentiment increased significantly in March, exceeding market expectations. The economic sentiment index released by the German Center for Economic Research (ZEW) rose to 51.6 points from 26.0 points in February. Earlier, analysts surveyed by Reuters expected the index to be 50.3 points.

②ZEW chairman Ahim Wanbach said that the improvement in investor sentiment is mainly due to positive signals from Germany's fiscal policy, such as the federal budget reaching billions of eurosPolitical plan. He also noted that the ECB's sixth consecutive rate cut has improved financing conditions, especially the prospects for the metals, steel manufacturing and mechanical engineering industries have improved.

③The index is based on a survey of about 350 analysts from German financial institutions, ranging from -100 to +100. This is the second straight month of the index, as the German parliament's lower house prepares to vote on a massive lending plan, which aims to stimulate growth in Europe's largest economy through infrastructure investment.

④ The Conservatives and Social Democrats (SPD) are negotiating to form an intermediary coalition, planning to establish a 500 billion euro infrastructure fund and relax the lending restrictions stipulated by the constitution to increase security spending. If implemented, this plan will break Germany's decades of fiscal conservatism, which has driven the euro zone yields and the euro exchange rate to rise in the past week.

⑤The German Institute of Economics (DIW) said that infrastructure funds alone could increase economic output by more than two percentage points per year in the next 10 years. If more expenditures include defense and infrastructure are included, Germany's economic growth rate is expected to be 2.1% in 2026. In addition, the German Institute of Economics (IfW) also raised its forecast for Germany's economic growth in 2026 to 1.5%, and the increase in public spending is expected to drive economic growth.

Eurozone banks need to adapt to changes in central bank reserve supply methods

①In a blog post on March 18, 2025, the European Central Bank (ECB) pointed out that excess liquidity in the eurozone banking system will decline in the next few years. ②ECB stressed that avatradescn.commercial banks need to be accustomed to using the ECB's liquidity tools regularly to maintain adequate reserves. ③The article was written by ECB board member Isabel Schnabel and regulatory head Claudia Buch, pointing out that banks must ensure operational preparations for changes in the central bank's reserve supply mode. ④ECB believes that adjusting liquidity management practices and being prepared to participate in monetary policy operations is a necessary move for banks.

German bond yields are expected to rise ahead of ZEW data and the German Bundestag vote

Christoph Rieger of avatradescn.commerzbank Research said in a report that German government bond yields are expected to reverse Monday's decline driven by investors' optimism about business confidence and a historic key vote on fiscal expansion plans. "Today, if the German Bundestag approved a constitutional amendment and abandoned Germany's long-known fiscal stance, it would make history." "Today's ZEW (indicators) should reflect the excitement we heard in the investor call." Rieger said the ZEW indicator could rise and the increase could be higher than expected, and coupled with the boost from the German Bundesliga vote, "all support the recent pullback of German Treasury bond rally." The 10-year German Treasury yield closed at 2.813% on Monday, down nearly 7 basis points, according to Tradeweb.

3. Trends of major currency pairs in the New York Stock Exchange before the New York Stock Exchange

Euro/USD: As of 20:20 Beijing time, the euro/USD fell and is now at 1.0921, a drop of 0.02%. Before the New York Stock Exchange, weakness in economic data, uncertainty in monetary policy and bias in market sentiment led to a downward trend in the day's exchange rate. Judging from the trend of the trend chart, if the euro zone economic data cannot improve significantly in the future and the ECB's monetary policy maintains the current pace, the euro/dollar exchange rate may continue to fluctuate at low levels, and bear sentiment may still dominate. However, if the eurozone introduces effective policies to stimulate economic growth, or if the economic data shows a positive turning point, the exchange rate trend may reverse. Investors need to pay close attention to the subsequent release of economic data in the euro zone and the United States, central bank policy adjustments and changes in market sentiment in order to accurately grasp the euro/dollar exchange rate trend and make reasonable investment decisions.

GBP/USD: As of 20:20 Beijing time, GBP/USD fell and is now at 1.2971, a drop of 0.16%. Before the New York Stock Exchange, the pound sterling and the US dollar face certain pullback pressure during the European session. Pay attention to the gains and losses of the key support level 1.2893. If it can be held, there will still be upward actions that can impact the key resistance level in the future; if the support level is effectively broken, the market may face adjustments or even reversals. Investors need to pay close attention to the results of the Bank of England and the Federal Reserve's meeting this week and the release of relevant economic data, which may have a significant impact on the pound-to-dollar exchange rate trend.

Spot gold: As of 20:20 Beijing time, spot gold rose, now at 3029.51, an increase of 0.96%. Before the New York Stock Exchange, the gold market on March 18, 2025 was in a avatradescn.complex situation where long and short factors were intertwined. When investors pay attention to the trend of gold prices, they need to closely track key factors such as global economic data, geopolitical situation, and policy trends of central banks in various countries, avatradescn.comprehensively judge the future trends of the gold market, and make investment decisions with caution.

Spot silver: As of 20:20 Beijing time, spot silver rose, now at 34.121, an increase of 0.85%. Before the New York Stock Exchange, when investors pay attention to the trend of the silver market, they need to closely track key factors such as the release of global economic data, the adjustment of monetary policies of central banks in various countries, and changes in the geopolitical situation. These factors intertwined and influenced each other, and together determine the future direction of the silver market. In the process of investment decision-making, investors should fully consider their own risk tolerance, avatradescn.combine market changes, and formulate reasonable investment strategies to deal with the failure of the silver marketDeterminism.

Crude oil market: As of 20:20 Beijing time, U.S. oil rose, now at 68.340, an increase of 1.44%. Before the New York Stock Exchange, investors and practitioners in related industries need to be vigilant at all times, closely monitor key factors such as the evolution of the geopolitical situation, the dynamic adjustment of policies of oil-producing countries, and the global economic growth trend. Through avatradescn.comprehensive analysis and judgment, we strive to accurately grasp the trend of the crude oil market, so as to make scientific and reasonable decisions.

4. Institutional View

Institutional Survey: Risk of recession in the United States Increases Economic Growth May Slows

In the CNBC Federal Reserve Survey in March, respondents raised the risk of recession to the highest level in six months, with the average GDP forecast for 2025 from 2.4% to 1.7%, and raised inflation expectations. The change seems to be largely rooted in concerns about the Trump administration’s fiscal policy, especially tariffs, which now see tariffs rather than inflation as the biggest threat to the U.S. economy. The outlook for the S&P 500 has declined for the first time since last September. 32 respondents, including fund managers, strategists and analysts, raised the likelihood of a recession to 36% from 23% in January. In addition, three-quarters of respondents expect a 25 basis point cut twice or more this year.

Caito Macro: Japan's tightening cycle is long

Caito Macro's Asia-Pacific region head Marcel Thieliant said that Japan's monetary and fiscal policies still have a long way to go. Thieliant said fiscal policy will continue to tighten as Japan's government spending actually shrinks. As the budget deficit will narrow, interest payments will only rise slightly, and the ratio of government debt to GDP will continue to decline. Despite the downside risks posed by trade tensions, he expects GDP to grow by 0.8% this year, above the trend level. Thieliant said wage growth should remain high enough to bring inflation above the Bank of Japan’s 2% target after a new round of strong spring wage negotiations. Therefore, he expects the Bank of Japan to raise interest rates again at its May meeting and expects interest rates to rise to 1.5% higher than the market's general expectations by 2027.

The above content is all about "[Ava Aihua Foreign Exchange Platform]: Israeli troops have large-scale air strikes on Gaza, and the short-term trend analysis of spot gold, silver, crude oil and foreign exchange on March 18". It is carefully avatradescn.compiled and edited by the Avatrade Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!

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