The Trump administration's trade policies are rapidly reshaping the international trade landscape, but they also bring huge uncertainties. The slowdown in economic growth and the new round of inflationary pressures are intertwined, which may turn the United States from a leader in the global economy into a laggard. Foreign central banks and institutions are struggling to cope with the resulting shocks, and the risk of stagflation (economic stagnation and inflation coexist) is rising. The International Monetary Fund (IMF) warned that the trade war could deal a serious blow to the global economy.

Explosions suddenly occurred in the Middle East last week, and the United States will intensify its crackdown on the Houthi armed forces in Yemen. The Federal Reserve released an important signal. The Federal Reserve said that due to the uncertainty of the US tariff policy, it has no intention of rushing to further cut interest rates this year, which provides support for the US dollar. Due to geopolitical and economic uncertainties, gold prices have risen sharply on a weekly basis and hit a record high.

Earlier last week, the Federal Reserve kept interest rates unchanged and announced a slowdown in the pace of balance sheet reduction, which boosted US stocks. But the resolution also mentioned that uncertainty has increased. The bank raised its expectations for inflation in its economic forecasts while lowering its expectations for growth.

Review of last week's market performance:

U.S. stocks returned to positive territory last Friday as investors weighed mixed messages from the Federal Reserve and Trump said he would remain "flexible" in terms of the reciprocal tariff plan set on April 2. Meanwhile, a collective rise in large technology stocks led to a rebound in U.S. stocks in late trading on Friday, and a large number of options expired, exacerbating market volatility and surging stock market trading volume. The Dow Jones Industrial Average closed up 32.00 points, or 0.08%, at 41,985.32; the S&P 500 closed up 4.67 points, or 0.08%, at 5,667.56; and the Nasdaq Composite closed up 92.43 points, or 0.52%, at 17,784.05.

Gold prices rose for the third consecutive week on the prospect of a Fed rate cut, despite lingering geopolitical and economic uncertainties, due to a stronger dollar and profit-taking. At the end of New York trading, spot gold closed down 0.71% at $3,023.20 per ounce, up 1.31% this week. This year, gold has hit 16 new record highs, reaching a record high of $3,057.50 per ounce last Thursday. COMEX gold futures fell 0.49% to $3,028.70 per ounce, up 0.92% this week, and once refreshed the intraday record high to $3,065.20.

Last week, after hitting a high of $34.240 at the beginning of the week since October last year, the silver price continued to fall for three trading days and plummeted to nearly $32.660 before the weekend. After that, it technically rebounded and closed slightly above $33. Spot silver fell 1.68% to $33.028 per ounce, down 2.26% this week. COMEX silver futures fell 1.69% to $33.545 an ounce, and fell 2.56% this week.

The dollar has been under pressure this year due to concerns that the Trump administration's trade policies will hit U.S. economic growth. Last week, the Federal Reserve said it was in no hurry to cut interest rates, giving the dollar a respite. The dollar index continued its rise for the third consecutive trading day and climbed to a weekly high of $104.22. The trend reflects investors' continued caution in dealing with escalating trade frictions and the Federal Reserve's dovish policy signals.

The dollar rose slightly by 0.33% against the euro to $1.0816 last week, achieving its first weekly gain this month, as investors took profits from the euro's recent gains. The pound fell 0.36% to $1.2920, continuing its weakness. The yen was weaker, with USD/JPY rising 0.35% to 149.30. The continued weakness of commodity currencies such as the Australian dollar; New Zealand dollar; and Canadian dollar highlights risk aversion, while the depreciation of the yen exposes the vulnerability of the Japanese economy under external pressure. If the tariff policy on April 2 is tougher than expected, the US dollar index may break through 105, but we need to be wary of the risk of a pullback if the US economic data shows weakness.

Last Friday, oil prices fell slightly, but recorded weekly gains for the second consecutive week, mainly due to the US's new round of sanctions on Iran and the new production cut plan announced by the Organization of Petroleum Exporting Countries and its allies (OPEC+), which triggered market expectations of tighter supply. US WTI spot crude oil fell slightly by 0.13% to $68.23 per barrel. From a weekly performance perspective, Brent and WTI crude oil prices both recorded an increase of about 2%, the largest weekly increase since the first week of 2025.

Before the weekend, the price of Bitcoin fell below $84,000, and investors rotated funds to altcoins. Bitcoin ETF saw another $165 million of outflows last Thursday, and four consecutive days of inflows continued since last Friday. During this period, Bitcoin ETF investment exceeded $680 million. It is worth noting that since January, Bitcoin ETFs have not seen a four-day buying wave. Recent trading patterns suggest that U.S. corporate investors continue to strategically accumulate rather than take profits when Bitcoin prices reach $85,900, which is positively affected by the interest rate pause announced by the U.S. Federal Reserve on Wednesday.

The U.S. Treasury Department released a report on international capital flows last week, showing that the U.S. Treasury bonds held by Japan, the number one "creditor" of the United States, and China, the second largest "creditor", have increased to varying degrees, while U.S. Treasury yields have risen, with the 2-year Treasury yield rising to 4.249%, the highest level since February 27, and the 10-year Treasury yield rising to 4.315%.

Market Outlook This Week:

The upcoming week: U.S. PCE, Fed officials' speeches and PMI are in focus. In terms of data, there will be a final report on the US real GDP for the fourth quarter of 2024 on Thursday, and a personal consumption expenditure report for February on Friday, including the PCE price data favored by the Federal Reserve. The market expects the year-on-year growth rate of PCE to remain at 2.5%, and the core PCE will rebound from 2.6% to 2.7%. After the PCE report, the University of Michigan will also release the final report on the Consumer Confidence Index in March, which includes consumers' expectations for inflation rates in one year and five to ten years. Fed Chairman Powell mentioned this data at a press conference, saying that the central bank will pay attention to this abnormal data.

Trump's trade policy; support for the US dollar quickly faded

The US dollar successfully reversed its trend in the second half of last week, affected by widespread selling pressure in the complexity of risks, while continued tariff concerns and further repricing of the Fed's interest rate path also played a role. From another perspective, according to data from the US Commodity Futures Trading Commission (CFTC) as of March 18, speculative traders have accumulated short positions worth $932 million, and they predict that the US dollar will weaken in the future.
This is a stark contrast to mid-January, when speculative traders had long USD positions of $34 billion. The market’s view on the ‘Trump deal’ has been turned upside down, with policy confusion and uncertainty changing the market’s view on the impact of the economy, inflation and monetary policy – ​​from stimulative to contractionary. This market change is further evidence that Trump’s policies and doubts about the US economy are weakening the outlook for the dollar.

Expectations that Trump’s trade policy promises to support the dollar are fading fast. Markets have also lowered their dollar forecasts, saying they had previously underestimated the negative impact of Trump’s series of policies on US growth. In the short term, risk aversion may support a stronger dollar, but the potential negative impact of the trade war on the US economy may limit the dollar’s ​​gains. In the medium term, stagflation risks and Fed policy adjustments will complicate the dollar’s ​​performance. In the long term, the duration of the trade war and changes in the global economic landscape will be key factors in determining the dollar’s ​​performance. Investors need to pay close attention to trade policy progress, economic data and central bank policy trends.

It is expected that with the increasing possibility of a rate cut before the Federal Open Market Committee (FOMC) meeting in June, the US dollar index has a great chance to challenge the psychological mark of 100.

Gold has hit 16 all-time highs this year, with geopolitical tensions helping it, and may be expected to target 3,100 in the short term.

Traditionally, gold is seen as a safe investment in times of geopolitical and economic uncertainty, and usually performs strongly in a low-interest rate environment. This year, gold has hit 16 all-time highs, reaching an all-time high of $3,057.50 per ounce. Overall, the price of gold has been driven mainly by geopolitical tensions in the near term. If the situation in the Middle East escalates over the weekend, and all parties are responding to Trump's tariffs in early April, and there is a possibility of renegotiation of the mining agreement in Ukraine, market uncertainty will increase, and the price of gold is expected to target around 3,100, setting a new record high again.

Oil prices hit the biggest weekly increase this year, the central axis of the Bollinger Band is strongly suppressed, can the two major negative factors be realized?

Focus of this week

Overall, the trend of oil prices this week mainly focuses on the weekend's meeting between the United States and Ukraine and the United States and Russia. From a technical point of view, the long daily line is strongly suppressed by the central axis of the Bollinger Band, which requires strong stimulation from fundamental news. If the negotiations on the Ukraine issue are not as expected, it may become a major driving force for oil prices to rise this week. At the same time, we also need to pay attention to the news of US sanctions on Iran. On Saturday morning, Witkoff, a special envoy of US President Trump, said that Trump told Iran "we should talk", which may be bearish news for oil prices.

Conclusion:

The US tariff policy is still the focus of Wall Street. The Trump administration plans to implement "reciprocal" tariffs on April 2, and Trump also called April 2 the "Liberation Day" of the United States. It is reported that France hopes that the European Union will consider taking strong retaliatory measures "anti-coercion tools".

In terms of geopolitics, the Russian and US delegations will hold talks in Riyadh, the capital of Saudi Arabia, on Monday. Earlier, Putin and Trump focused on the normalization of Russian-US relations and the situation in Ukraine during the phone call. Trump declared that the Russian-Ukrainian conflict would soon cease fire. At present, the situation in the Middle East has not shown any clear signs of cooling down. The Israeli army continues to launch air strikes and artillery attacks on neighboring countries, while launching ground operations in many places in the Gaza Strip.

Overview of important overseas economic events and matters this week:

Monday (March 24): US and Russian officials held talks in Riyadh, the capital of Saudi Arabia, on the Russian-Ukrainian issue. , Eurozone March manufacturing/service/composite PMI preliminary values, US March S&P global manufacturing/service/composite PMI preliminary values

Tuesday (March 25): US January FHFA house price index monthly rate, New York Fed President Williams delivered an opening speech at an event, US February new home sales total annualized, US March Conference Board Consumer Confidence Index, US March Richmond Fed Manufacturing Index

Wednesday (March 26): UK February CPI monthly rate, UK Chancellor of the Exchequer Reeves announced the spring budget statement, US February durable goods orders monthly rate, US EIA crude oil inventory for the week ending March 21

Week Thursday (March 27): St. Louis Fed President Moussalem delivered a speech, the number of initial jobless claims in the United States for the week ending March 22, the final value of the annualized quarterly rate of real GDP in the fourth quarter of 2024 in the United States, and the monthly rate of the U.S. existing home sales index in February

Friday (March 28): The Bank of Japan announced a summary of the opinions of the review committee members of the March monetary policy meeting, the final value of the annual rate of GDP in the fourth quarter of the United Kingdom, the seasonally adjusted unemployment number in Germany in March, the industrial sentiment index in the euro area in March, the monthly rate of GDP in Canada in January, the annual rate of the core PCE price index in the United States in February, the final value of the University of Michigan Consumer Confidence Index in the United States in March/the final value of the one-year inflation rate expectation

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