Tag Archives: The dollar

Chinese Stocks Rise Amid Rate Hold

Chinese Stocks Rise Amid Rate Hold and Escalating Trade Tensions

At the start of a week marked by economic and political volatility, Chinese stock indexes posted strong gains,
supported by the central bank’s decision to hold interest rates steady for the sixth consecutive time,
along with government efforts to enhance financial stability amid rising trade tensions with the United States.

 

In contrast, statements by U.S. President Donald Trump stirred anxiety and caution in American markets
after he questioned the independence of the Federal Reserve.
This led to a rise in long-term bond yields and added more uncertainty to the global economic outlook.

 

Contents

 

China

Chinese Stocks Climb to Two-Week High Backed by Rate Hold and Market Support Measures

Chinese stock indexes closed Monday’s trading with notable gains, reaching their highest levels in two weeks.
This was driven by government efforts to promote financial stability and
the central bank’s decision to keep lending rates unchanged for the sixth time in a row,
amid escalating trade tensions with the United States.

 

The Shanghai Composite Index rose by 0.45% to close at 3291 points,
while the CSI 300 Index gained 0.35% to reach 3784 points—both hitting their highest levels since April 3.
The Shenzhen Composite Index outperformed, climbing 1.6% to reach 1910 points.

Meanwhile, the U.S. dollar declined against the Chinese yuan by 0.2%, reaching 7.2867 yuan as of 11:46 AM Mecca time.

This positive performance coincided with the widely expected decision by the People’s Bank of China to keep lending rates unchanged.
There are also expectations of an additional stimulus package during the second quarter of this year to mitigate the impact of the U.S.-led trade war.

Last Friday, Chinese Premier Li Qiang called for concrete steps to stabilize the stock market as part of a broader package aimed at reducing the effects of U.S. trade policies and boosting confidence in domestic markets.

 

United States

U.S. Bond Yields Rise After Trump’s Controversial Remarks on the Federal Reserve

U.S. bond yields rose on Monday following controversial remarks from President Donald Trump,
who hinted at the possibility of removing Federal Reserve Chair Jerome Powell.
This raised concerns over the central bank’s independence and impacted investor appetite for U.S. assets.

The yield on 10-year Treasury bonds rose by 7.2 basis points to reach 4.401%,
while the 30-year yield jumped 9 basis points to 4.897%.
In contrast, 2-year yields, which are more sensitive to monetary policy, remained steady at 3.792%.

Tensions escalated after Trump launched a renewed attack on Powell, stating in an interview:
“If we had a Fed Chair who knew what he was doing, interest rates would have already gone down.”

These comments deepened doubts about the Fed’s ability to operate free from political influence,
particularly given the current uncertainty in U.S. trade policies. As a result,
bond markets experienced volatility and investors perceived increased risk in the U.S. economic environment.

 

 

 

Chinese Stocks Rise Amid Rate Hold and Escalating Trade Tensions

Chinese Industrial Profits Decline in Early 2025 Amid Rising Trade Tensions

Chinese Industrial Profits Decline in Early 2025 Amid Rising Trade Tensions

Industrial profits in China shrank during the first two months of 2025,
reflecting mounting pressure on the world’s second-largest economy as trade tensions
with the United States escalate.

 

Contents

 

 

 

China

Data released on Thursday by the National Bureau of Statistics showed that industrial sector profits dropped
by 0.3% year-over-year in January and February—a surprising decline that defied Bloomberg Economics’ forecast of a 9% increase.

This setback follows a temporary rebound in December, raising questions about the sustainability of the industrial sector’s recovery.
Analysts believe that weak profits undermine business confidence and reduce companies’ willingness to invest and hire,
deepening the challenges Beijing faces in its efforts to stimulate domestic demand.

The situation is further complicated by the ongoing trade war led by US President Donald Trump
with renewed threats of higher tariffs putting additional pressure on Chinese exports,
which accounted for about one-third of the country’s economic growth last year.

Meanwhile, deflationary pressures within factories continue to squeeze corporate profit margins,
highlighting the fragility of the economic recovery at the start of the new year.

 

Trump

Trump: We Will Seek a Deal on TikTok; Ban Could Be Delayed if a Settlement Is Reached

U.S. President Donald Trump announced on Wednesday that the country would pursue a deal regarding the popular app TikTok,
stating that the proposed ban could be delayed if a satisfactory agreement is reached—particularly with Chinese involvement.

Trump emphasized that China must play a role in
resolving the issue and noted he is considering reducing some tariffs on Beijing
if it successfully negotiates a TikTok settlement.

He added, “I have full authority to secure a broad deal if I choose to. There are several ways to acquire TikTok,
and we will choose the best method that is in the country’s best interest.”

It’s worth noting that earlier this year, Trump signed an executive order
delaying the enforcement of the TikTok ban in the U.S. originally set for January 19,
unless the app is sold to an American entity or an ally of Washington.

 

 

 

Chinese Industrial Profits Decline in Early 2025 Amid Rising Trade Tensions

ECB Vice President: Inflation Is on the Right Track Despite Challenges

ECB Vice President: Inflation Is on the Right Track Despite Challenges

Amid global economic fluctuations and challenges facing financial markets,
inflation in the Eurozone remains under control, according to European Central Bank (ECB) Vice President Luis de Guindos.
He emphasizes that fundamental factors have begun to stabilize despite ongoing challenges.

 

Contents

 

Inflation Stability

Luis de Guindos, Vice President of the European Central Bank,
affirmed that inflation remains under control despite a slight increase in recent months.
He pointed out that key factors, such as employee compensation and inflation in the services sector,
have started to stabilize.
This supports the ECB’s forecast that inflation will reach 2% by the end of 2025 or early 2026.

 

In an interview published by the ECB, de Guindos stated that the European economy continues to face uncertainty due to tariffs,
global financial policies, and the impact of adjustments in interest rate expectations and German bond yields,
which are being closely monitored.

 

 

 

 

Growth Challenges

De Guindos highlighted that U.S. trade and regulatory measures are a major source of instability,
noting their potential impact on economic growth forecasts in the Eurozone.
As a result, the ECB has lowered its growth projections for 2025 and 2026 by 0.2 percentage points,
citing declining investor confidence and fears of a potential trade war.

 

Nevertheless, he suggested that European consumption could recover if consumer confidence improves,
supported by factors such as rising real wages and better financing conditions.

In conclusion, the ECB Vice President stressed the importance of European market reforms,
including the integration of the internal market, completion of the banking union,
and the Capital Markets Union, to enhance productivity and European competitiveness.

 

 

 

ECB Vice President: Inflation Is on the Right Track Despite Challenges

Reserve Bank of Australia Cuts Interest Rates for the First Time

Reserve Bank of Australia Cuts Interest Rates for the First Time in Four Years Amid Inflation Slowdown Expectations

On Tuesday, February 18, the Reserve Bank of Australia (RBA) decided to cut interest rates for the first time in four years,
lowering the benchmark borrowing rate by 25 basis points from 4.35% to 4.10%.
This move followed nine consecutive meetings of rate stability and aligned with market expectations,
which had anticipated this step amid mounting economic challenges.

 

Topic
Australia
United Kingdom

 

 

 

 

 

Australia

In its monetary policy statement, the RBA outlined its economic outlook for the coming period,
lowering its forecasts for both inflation and unemployment while highlighting continued weak household spending,
despite sustained strong public demand.

According to the projections:

  • Inflation is expected to reach 2.4% by June 2025, rise to 3.2% by June 2026, and stabilize at 2.7% by June 2027.
  • GDP growth is forecasted to be 2.0% in June 2025, improving to 2.3% in June 2026, and stabilizing at 2.2% by 2027.
  • Unemployment is projected to remain steady at 4.2% over the next three years until 2027, while wage growth is expected to gradually decline, reaching 3.4% by June 2025, 3.2% in 2026, and 3.1% in 2027.

These forecasts are based on assumptions regarding interest rates,
with the cash rate expected to be 4.0% in June 2025, decrease to 3.6% by December 2025, and fall further to 3.4% by June 2026.

Despite the rate cut, the RBA noted that the Australian dollar remains close to expected levels,
considering trade conditions and bond yield differentials.
However, economic outlook uncertainty persists, given ongoing global market volatility.

 

 

 

 

 

 

United Kingdom

UK Reports Unexpected Rise in Unemployment Benefit Claims in January Despite Slowing Unemployment Rate

Data released by the UK Office for National Statistics (ONS) on Tuesday morning indicated a deterioration in the UK labor market in January,
as unemployment and wage growth figures for the quarter ending in December fell short of expectations.

 

According to the report:

  • New unemployment benefit claims increased by 22,000 in January, significantly exceeding expectations of 10,000.
    This follows a     15,100 decrease in claims in December,
    with the previous estimate revised upward from     a minor 700-claim increase.
  • The UK unemployment rate slowed to 4.4% in the three months ending in December,
    beating forecasts of a rise to     4.5% and remaining steady at the 4.4% level recorded in the previous quarter ending in November.
  • Average wages (excluding bonuses) rose by 6.0% year-on-year in the three months ending in December,
    surpassing expectations of     5.9% growth.
    This follows an upward revision of the November quarter figure from     5.5% to 5.6%.

 

These figures highlight

ongoing economic pressures on the UK labor market,
with the increase in unemployment benefit claims signaling a weakening employment sector.
However, the slower unemployment rate and improved wage growth may ease recession concerns,
potentially influencing Bank of England’s future monetary policy decisions.

 

 

 

Reserve Bank of Australia Cuts Interest Rates for the First Time

The Dollar Drops to Its Lowest Level in 2025

The Dollar Drops to Its Lowest Level in 2025 Amid Economic Data and Tariffs

The dollar declined to its lowest level in 2025 due to weak economic data and uncertainty surrounding tariff policies,
increasing pressure on the U.S. currency amid expectations of interest rate cuts.

 

Contents

 

 

 

 

 

The Dollar Index Declines Amid Weak Data

The dollar fell to its lowest level this year, affected by weak retail sales data and ongoing uncertainty regarding U.S. tariff policies, raising doubts about the currency’s ability to gain further.
The Bloomberg Dollar Spot Index dropped by 0.5% on Friday, reaching its lowest level during the session, after weaker-than-expected January retail sales data reinforced expectations that the Federal Reserve might cut interest rates more aggressively than previously anticipated.

 

The Euro Continues to Gain Amid Trade Uncertainty

Meanwhile, the euro continued its upward momentum for the fourth consecutive day, reaching a three-week high, supported by comments from U.S. President Donald Trump regarding tariffs, which did not include any immediate measures against Europe.
The dollar also faced additional pressure due to ongoing uncertainty in U.S. trade policies, which has weakened confidence in the currency despite its recent highs earlier this month.

 

Decline in Bullish Bets on the Dollar

Data from the Commodity Futures Trading Commission (CFTC) revealed that speculative traders have reduced their bullish bets on the dollar for the fourth consecutive week. Net long positions fell by $4.7 billion to $26.5 billion, according to Bloomberg data.

 

 

 

 

 

 

Increasing Pressure on the Dollar

Technical indicators monitored by JPMorgan have turned bearish on the dollar,
reflecting “market fatigue from tariff concerns more than any other factor.”
Wayne Thinn, Head of Global Markets Strategy at Brown Brothers Harriman,
stated that the sharp decline in January retail sales—the largest in nearly two years
—could lead the Federal Reserve to cut interest rates by 50 basis points in 2025,
adding further pressure on the dollar in the near term.

 

 

Future Market Expectations for the Dollar

Despite the recent decline, some analysts still expect the dollar to remain strong in 2025,
especially if trade tensions escalate.
Goldman Sachs strategists indicated that the dollar’s continued strength depends on the scale and speed of a potential second trade war, predicting that the currency would maintain high levels unless there are significant shifts in economic policies.
Meanwhile, a survey conducted by Bank of America among more than 50 global fund managers found that nearly half of them expect the dollar to peak in the first quarter of this year.
Their evaluations suggest that narrow interest rate differentials could become a key headwind for the U.S. currency moving forward.

 

 

 

 

The Dollar Drops to Its Lowest Level in 2025

 

The U.S. Labor Market Records a Slowdown in Hiring

The U.S. Labor Market Records a Slowdown in Hiring and an Improvement in Wages in January

The U.S. Bureau of Labor Statistics released its monthly report on Friday,
detailing the performance of the labor market in January.
The data revealed a disparity between employment figures and market expectations.

 

Topic

United States

China

 

 

 

 

United States

According to the report, the U.S. economy added 143,000 new jobs in January,
falling short of expectations, which had predicted an increase of 170,000 jobs.
However, December’s employment figures were revised upward to 307,000 jobs from the initially reported 256,000,
indicating stronger momentum in hiring during the previous month.

As for unemployment, the rate declined to 4%, beating expectations that anticipated it would remain at 4.1%.
This suggests that the labor market remains resilient despite the slowdown in hiring.

Regarding wages, the average hourly earnings increased by 0.5% on a monthly basis in January,
surpassing the expected rise of 0.3%.
On an annual basis, wages grew by 4.1%, exceeding forecasts that had predicted a slowdown to 3.8%.
The previous reading for December stood at 3.9%.

 

 

 

China

Consumer Inflation in China Rises for the First Time Since August, Driven by Lunar New Year Spending

China’s consumer inflation accelerated for the first time since August,
supported by increased household spending during the Lunar New Year holiday,
despite ongoing deflationary pressures in the world’s second-largest economy.

The National Bureau of Statistics announced on Sunday that the Consumer Price Index (CPI) rose
by 0.5% in January compared to the previous year,
surpassing December’s increase of 0.1% and exceeding economists’ expectations of a 0.4% rise,
according to a Bloomberg survey.

This increase was primarily driven by a surge in temporary holiday spending during the eight-day break.
Service prices rose by 0.9%, accounting for more than 50% of the total increase in consumer inflation.

Despite this temporary improvement, deflationary pressures persist,
as factory prices continued their contraction for the 28th consecutive month, declining by 2.3%.
This marks the same rate of contraction recorded in December,
highlighting ongoing challenges in China’s industrial sector.

 

 

 

The U.S. Labor Market Records a Slowdown in Hiring

Morgan Stanley Lowers Rate Cut Expectations

Morgan Stanley Lowers Rate Cut Expectations Amid Tariff Uncertainty

Morgan Stanley has revised its forecast for the Federal Reserve’s interest rate cuts this year,
citing ongoing uncertainty surrounding the tariff policies implemented by President Donald Trump’s administration.

 

Topic

Forecasts

U.S. Dollar Performance

 

 

 

 

 

Forecasts

The U.S. bank now expects the Fed to cut rates by only 25 basis points in 2025,
a revision from its previous forecast of two cuts of the same magnitude in March and June.
This adjustment is attributed to the potential impact of new trade policies,
which could drive inflation higher and increase pressure on the Federal Reserve as it attempts to control inflationary pressures.

 

Analysts at Morgan Stanley noted in a research memo that uncertainty surrounding personal consumption
expenditure inflation will remain high, even if tariffs are avoided.
With this revision, Morgan Stanley joins banks such as Macquarie and Barclays in predicting only one rate cut this year,
while Goldman Sachs and Wells Fargo still expect two cuts.

 

 

 

 

 

U.S. Dollar Performance

The U.S. Dollar Index declined during Wednesday’s trading session,
weighed down by pressures from the ongoing trade war with China,
despite rising against the yuan.
Meanwhile, the Japanese yen recorded strong gains as expectations for further rate hikes by the Bank of Japan increased.

The dollar index, which measures the U.S. currency’s performance against six major currencies,
fell by 0.5% to 107 points.
Against the Japanese yen, the dollar dropped by 1% to 152.69 yen,
surpassing its lowest level in over a month at 153.09 per dollar.
This decline followed recent data showing real wage growth in Japan for the second consecutive month,
reinforcing bets that the Bank of Japan will continue tightening its monetary policy.

 

 

Morgan Stanley Lowers Rate Cut Expectations Amid Tariff Uncertainty

European Markets Decline Amid Trump’s Trade War Escalation

European Markets Decline Amid Trump’s Trade War Escalation and Threats Against the EU

European markets began their weekly trading with sharp declines, impacted by U.S. President Donald Trump’s decision to impose new tariffs on China, Canada, and Mexico, while escalating threats to impose additional tariffs on the European Union, increasing uncertainty in global markets.

 

 

Contents:

 

 

 

 

Stock Indices

European Stock Indices and Major Sectors Decline

The Stoxx Europe 600 index dropped 1.28% to 532 points, amid broad-based losses across most sectors.

The automotive sector led the declines, falling 3.5%, alongside drops of around 2% in the technology, industrial, and mining sectors. Among the affected companies, France’s Valeo, an automotive components manufacturer, plunged 6.70% to €10.10, while Renault fell 2.05% to €48.63.

In Germany, BMW shares declined 3.44% to €75.90, while Volkswagen lost 5%, dropping to €93.72, and Porsche fell 3.80% to €59.30.

Losses extended to major indices:

  • Germany’s DAX lost 1.54%, reaching 21,396 points.
  • The UK’s FTSE 100 fell 1.14% to 8,575 points.
  • France’s CAC 40 dropped 1.41% to 7,838 points.

 

 

Trump

Trump Escalates Trade War Threats Against Europe

These market declines occurred amid an escalating trade war, as Trump announced on Saturday a 25% tariff on Canadian and Mexican imports, along with a 10% tariff on Chinese goods, set to take effect on Tuesday.

In an interview with the BBC, Trump indicated that the EU could be the next target of his tariff policies, stating:

“They don’t import our cars, they don’t take our agricultural products, or almost anything at all,
while we take everything from them, from millions of cars to vast amounts of food and agricultural products.”

He added that tariffs on European imports could be imposed very soon,
though he did not provide a precise timeline, describing the move as “imminent.”

 

 

 

 

 

Europe

EU Warns of Strong Response

In response, the European Union condemned Trump’s tariff decisions on China, Canada, and Mexico,
warning that it will not stand idle if its exports are targeted.

Despite escalating rhetoric against the EU, Trump appeared more flexible toward the United Kingdom, suggesting that he could reach an understanding with Prime Minister Keir Starmer, citing the stable trade relations between the two nations.

 

 

Global Markets

Escalating Tensions Pressure Global Markets

This escalation comes amid a period of heightened market uncertainty, with investors fearing the potential consequences of protectionist policies on the global economy and supply chains.
As threats of further tariffs continue, markets remain highly volatile, with concerns growing over the possibility of a full-scale trade war that could significantly impact global economic growth.

 

 

European Markets Decline Amid Trump’s Trade War Escalation

Trump Criticizes the UK Energy Windfall Tax

Trump Criticizes the UK Energy Windfall Tax
U.S. President-elect Donald Trump has labeled the windfall tax imposed on oil and gas companies in the United Kingdom as a “grave mistake,” urging the reopening of the North Sea for production and abandoning reliance on wind turbines.

 

Contents

 

 

 

 

 

 

Trump

Trump’s criticism came following the announcement by Keir Starmer’s government to extend the tax until 2030 and increase it to 38%,
bringing the total taxes on producers to 78%.
He pointed out that such policies have prompted companies like the U.S.-based Apache Corporation
to consider exiting the North Sea due to the lack of economic feasibility.

These policies starkly contrast with Trump’s plans to bolster oil and gas production in the United States,
highlighting a clear divergence in approach between the two sides.

 

 

 

The Dollar

Dollar Declines as Markets Await Trump’s Policies and Economic Data
The dollar weakened against most major currencies during trading last Friday but remains close to its highest level in over two years,
recorded on Thursday.

Markets are closely watching the inauguration of U.S. President-elect Donald Trump later this month,
with his anticipated policies—particularly on trade—creating a sense of uncertainty among investors.
Key areas of market interest include his protectionist stance toward the Eurozone,
Canada, and China, along with his views on cryptocurrencies and the U.S. dollar.

On the economic data front, government figures released today showed that the Institute
for Supply Management’s Manufacturing PMI rose to 49.3 points in December,
up from 48.4 points in November and exceeding expectations of 48.2 points.

 

 

 

 

 

Mike Johnson

Mike Johnson Re-Elected as U.S. House Speaker with Trump’s Backing
The U.S. House of Representatives re-elected Republican Mike Johnson as Speaker after
he secured the required majority of votes on Friday.

Initially, Johnson faced challenges during the voting process,
failing to secure the necessary 218 votes as three Republican members cast their votes for other candidates.
However, after discussions with Representatives Ralph Norman and Keith Self,
both decided to shift their votes in his favor, allowing him to surpass the threshold needed for victory.

Johnson ultimately triumphed over Democratic rival Hakeem Jeffries, who garnered 215 votes,
while a total of 434 members out of 435 attended the session.

This victory followed President-elect Donald Trump’s call for Republicans to support Johnson
and maintain their commitment to his leadership of the House.

 

 

 

Trump Criticizes the UK Energy Windfall Tax

Which is Better for Preserving Wealth, Gold or the Dollar?

Which is Better for Preserving Wealth, Gold or the Dollar?

When it comes to preserving wealth and saving, many investors face an important choice: Is it better to invest in gold or hold onto dollars? Each option has its own advantages and challenges, and the decision depends on various economic and financial factors.

 

Topic

Gold as a Safe Haven

The Dollar and Fiat Currencies

Comparison

Conclusion

 

 

 

 

 

Gold as a Safe Haven

  • Long-term stability: Gold is considered a safe haven in times of economic uncertainty, retaining its value even during inflation or deflation periods.
  • Protection from inflation: When currency values decline, demand for gold increases as a wealth-preserving asset.
  • Lower risk, lower returns: Although gold is stable, its returns are not as high as other investments, but it remains a safe long-term option.

 

 

The Dollar and Fiat Currencies

  • Liquidity and flexibility: The dollar provides quick liquidity and is easy to use in everyday transactions, also serving as the world’s primary reserve currency.
  • Market fluctuations: The dollar can be affected by inflation and monetary policies, and may lose purchasing power over time.
  • Other investment opportunities: Holding dollars can open doors to other investments like real estate and stocks, but it requires constant market monitoring.

 

 

 

 

 

 

Comparison

Between Gold and the Dollar

  • Safety: Gold offers more safety during crises compared to the dollar.
  • Returns: The dollar may be more beneficial for short- to medium-term investments.
  • Volatility: Gold is less volatile during times of crisis, while the dollar can be heavily influenced by economic and political events.

 

 

 

Conclusion

In the end, the choice between gold and the dollar depends on the investor’s financial goals and the surrounding economic conditions. For those seeking safety and protection from inflation, gold is an excellent option. On the other hand, for those looking to leverage liquidity and investment opportunities, the dollar can be a suitable choice, but one must be mindful of its volatility risks.

 

 

 

Which is Better for Preserving Wealth, Gold or the Dollar?