17/03/2025 - 08:37 UTCThe US dollar fell moderately against most major currencies last week, with the USDX down by 0.41% on the iFOREX trading platform. On a monthly basis, the dollar is down by approximately 3.8% early on Monday, hovering around 5-month lows. This week, key economies including the U.S., Japan and China are scheduled to release interest rate decisions. While the Federal Reserve is expected to hold rates steady, its commentary on tariff impacts will be closely watched. Similarly, the Bank of Japan is anticipated to maintain its 0.5% rate, despite inflation concerns, due to trade tension worries.
On Sunday, U.S. President Donald Trump revealed he will speak with Russian President Vladimir Putin on Tuesday as his administration seeks to mediate peace between Russia and Ukraine. Trump said he expects to make an announcement on the deal by Tuesday, with the talks centered on land and power plants. He also mentioned that there have already been discussions about dividing certain assets between the two countries.
Asian equities edged higher early on Monday, with China leading gains following Beijing's announcement of stimulus measures to support the economy. The China SSE, the China SZSE, and the Hong Kong 50 indexes rose marginally, as sentiment towards the country was boosted chiefly by Beijing unveiling “comprehensive” measures aimed at boosting domestic consumption and driving up economic growth. Despite this optimism, lingering concerns over U.S. trade tariffs and the week's central bank meetings, tempered overall gains.
Looking ahead, quarterly earnings reports from Lufax, Lithium Americas, Xiaomi, Xpeng, Tencent Music Entertainment Group, Accenture, Micron, Nike, Fedex, Miniso and Meituan are due later this week.
In the cryptocurrency market, Bitcoin continued its recent decline, falling 2.18% last week, while Ethereum saw a significant 12.06% drop on the iFOREX trading platform. This reflects a risk-off sentiment driven by a slowing U.S. economy and potential trade tariffs, with investors closely watching the Fed's March meeting for its assessment of these factors' impact on inflation and growth.
For the week ahead the focus could shift to monthly retail sales numbers from the U.S., inflation data from Japan in the form of CPI and interest rate decisions from the FOMC, the PBOC, the Bank of Japan and the bank of England. According to the CME Fedwatch tool, the market anticipates a 99% likelihood of unchanged rates in March. However, the tool suggests increasing probabilities of a rate cut at subsequent FOMC meetings, with odds of 30.5% in May and 58.1% in June.
The EUR/USD pair ended Friday's session with moderate gains, marking its second consecutive week of advances. The pair remains stable early on Monday, with the US Dollar (USD) holding firm ahead of today’s Retail Sales data release. However, Greenback faced headwinds following a weaker-than-expected Consumer Sentiment Index from the University of Michigan (UoM).
Market participants widely expect the Federal Reserve (Fed) to maintain its current policy stance when it concludes its two-day meeting on Wednesday.
Moreover, the EUR/USD pair could find support from improved risk sentiment following reports of potential ceasefire discussions between US President Donald Trump and Russian President Vladimir Putin.
Meanwhile, the Euro strengthened on the back of Germany’s recent agreement on a debt overhaul and a substantial increase in state spending. On the policy front, European Central Bank Vice President Luis de Guindos expressed concerns about growing economic uncertainty under President Trump’s administration.
Gold prices pulled back on Friday after reaching a record high, briefly surpassing $3,000 per ounce, as traders remained uncertain about US President Donald Trump's trade policies.
Geopolitical tensions continue to impact gold’s appeal. The Ukraine-Russia ceasefire remains uncertain, with Russia showing reluctance to fully commit to the proposed 30-day truce.
Traders are now turning their attention to this week’s Fed policy decision. On Friday, Fed Chair Jerome Powell highlighted that "market measures of inflation expectations have moved up, driven by tariffs," signalling concerns that trade policies could reignite inflationary pressures.
Oil prices rebounded on Friday, closing the week nearly unchanged as investors assessed the fading prospects of a swift resolution to the Ukraine war—an outcome that could have restored Russian energy supplies to Western markets.
Russian President Vladimir Putin stated on Thursday that Moscow supported the U.S. ceasefire proposal for Ukraine "in principle" but demanded clarifications and conditions that appeared to delay any immediate resolution.
On Friday, U.S. President Donald Trump reiterated calls for Russia to accept a ceasefire proposal, stating on his private social media platform that he aims to extract the U.S. from what he described as a "real mess" with Russia.
Moreover, Oil prices jumped early on Monday, buoyed by prospects of trade disruptions after the U.S. vowed to continue strikes against Yemen’s Houthis until their attacks ceased.
The US 500 rallied on Friday, led by a surge in tech stocks, but still closed its fourth consecutive losing week as escalating trade war tensions and a sharp drop in consumer sentiment weighed on markets.
Nvidia Corporation jumped more than 5%, leading the broader market higher as the semiconductor giant appeared poised to break its three-week losing streak.
The University of Michigan’s Consumer Sentiment Index fell sharply in March, dropping to 57.9 from 64.7 in February, its lowest level since November 2022. While current economic conditions remained largely unchanged, consumer expectations for the future declined significantly, particularly in areas related to personal finances and stock markets.
Meanwhile, concerns over rising inflation have led the Federal Reserve to adopt a more hawkish stance, dampening expectations for interest rate cuts soon.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
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