Markets have been by means of one other week the place tariffs have been the driving power behind market strikes. The information which I had thought could be the foremost occasion for the week didn’t stoke any actual volatility and that’s testomony to what we now have seen in 2025 to this point.
Markets are extra occupied with the strikes of the Trump administration than they’re in regards to the information.
US information this week confirmed indicators that the economic system could also be stalling whereas total market sentiment has been dented by tariff chatter and inflationary issues. This was mirrored within the CB client confidence information which confirmed a major uptick within the 12 month rate of interest expectations by shoppers.
U.S. client dropped in January for the primary time in nearly two years, and the products commerce hole hit a report excessive as companies sped up imports to keep away from tariffs. This factors to weak financial development or perhaps a potential contraction this quarter.
Knowledge from the Commerce Division additionally confirmed that whereas inflation slowed down yearly, costs stay stubbornly excessive with regular month-to-month will increase. In the meantime, the Trump administration is rising tariffs, which economists warn will result in greater costs as companies move prices to shoppers.
Sources: LSEG Datastream (click on to enlarge)
Inflation expectations amongst shoppers rose sharply in February. The Atlanta Federal Reserve reduce its first-quarter GDP forecast, now predicting the economic system will shrink by 1.5% yearly as an alternative of rising on the earlier estimate of two.3%.
The and struggles continued this week which isn’t any shock given the present market dynamics. The Worry and Greed index is now in concern territory as tariff chatter ramps up and financial information continues to underwhelm.
Supply: Isabelnet (click on to enlarge)
On the FX entrance,the returned to its king standing this week weighing on US greenback denominated pairs with the dropping floor and retreating from the psychological 1.0500 deal with.
is the most important loser this week and I used to be shocked by the selloff. Principally all the way down to the truth that tariffs have till now been a constructive for secure haven demand. The one clarification I can see is potential revenue taking and gold merchants involved by the rise in inflation expectations.
costs additionally struggled this week on rising issues about international development and Oil demand. A disagreement by OPEC + members on an output improve from April supplied a short respite on Thursday however was adopted by one other bearish day to finish the week.
Crypto markets are additionally feeling the pinch with on track for its largest weekly drop for the reason that collapse of FTX in 2022.
The Week Forward: Tariffs on the Forefront. Will Trump Observe By?
Asia Pacific Markets
The primary focus this week within the Asia Pacific area for me is China’s Two Classes assembly.
Markets are intently watching China’s Authorities Work Report, which Premier Li Qiang will ship on March 5. It would reveal the nation’s 2025 development goal and description key insurance policies. China is predicted to maintain its development aim at “round 5.0%,” the identical as in 2024, whereas giving extra particulars about fiscal and financial plans.
This Saturday morning, China will launch its official February buying managers’ index (PMI), with a slight development at 50.1 anticipated. The Caixin PMI will observe on Monday. On Friday, China Customs will present the primary commerce information for the primary two months of 2025.
Europe + UK + US
In developed markets, the US PCE information launched final week didn’t shake markets as anticipated however the Trump administrations proceed to throw curveballs for World Market individuals to navigate.
Subsequent week is necessary for the US, with commerce tariffs on imports from China, Mexico, and Canada probably beginning on March 4, together with key financial information, just like the February jobs report.
President Trump argues that international international locations will bear the associated fee attributable to a stronger greenback, however client costs might rise, much like previous tariffs. Client confidence is already shaky attributable to spending issues and austerity measures, and extra tariff information might worsen the outlook and dent total market sentiment.
Financial information, together with the ISM stories, is predicted to indicate sluggish development. Manufacturing and providers surveys recommend a weaker outlook, and company warning over altering commerce insurance policies might result in solely a small rise in payrolls. Federal job cuts might take months to indicate a transparent influence.
Subsequent week, the European Central Financial institution will resolve on rates of interest after reviewing a brand new inflation report. A 0.25% fee reduce is predicted, although inflation may rise in February earlier than easing. With extra hawkish voices within the ECB, debates on the ultimate fee for the eurozone are rising extra necessary.
Unemployment can also be in focus. Regardless of companies reducing jobs not too long ago, the unemployment fee stays at a report low of 6.3%. Any shift within the labor market might influence how far the ECB can decrease charges.
Chart of the Week
This week’s focus is on the (DXY) after a stable restoration this week which has propelled the DXY again above the 107.00 deal with.
Lots of the transfer was all the way down to the tariff chatter which arose towards the backend of the week and that’s more likely to carry over into Subsequent week.
At the moment the DXY is supported by the 107.00 deal with with the 100-day MA resting at 106.700 additionally possible to offer assist.
Rapid resistance rests at 108.00 earlier than the 108.49 deal with comes into focus.
US Greenback Index Every day Chart – February 28, 2025
Supply:TradingView.Com (click on to enlarge)
Key Ranges to Take into account:
Assist
Resistance
