The remarks made by U.S. President Donald Trump regarding import tariffs had a considerable impact on the financial markets during the European trading session on Friday (February 28, 2025). Traders are also awaiting the release of U.S. inflation data based on Personal Consumption Expenditure (PCE) this evening. This inflation metric is a crucial benchmark for the U.S. central bank (The Fed) in determining monetary policy.
Here are the updates from Trading Central:
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- German Inflation (year-on-year/February) at 8:00 PM WIB; forecast 2.2% vs previous 2.3%
- U.S. PCE Inflation (year-on-year/January) at 8:30 PM WIB; forecast 2.5% vs previous 2.6%
- Core PCE Inflation in the U.S. (year-on-year/January) at 8:30 PM WIB; forecast 2.7% vs previous 2.8%
- U.S. Personal Spending (month-on-month/January) at 8:30 PM WIB; forecast 0.3% vs previous 0.7%
GOLD
Gold prices (XAUUSD) continued their decline at the start of the European trading session, reaching a daily low of USD 2,851.05 per troy ounce. Compared to the closing price on Thursday, gold fell by USD 25.64 or 256.4 pips, touching a three-week low before slowly recovering.
The decline in gold prices was influenced by positive news from the trade negotiations between the UK and the United States, raising hopes for a trade agreement with other countries.
The reduced risk of a trade war negatively impacted gold, triggering some profit-taking. However, if the core PCE inflation data from the U.S. tonight is released lower than the forecast, there could be a positive sentiment for gold as it might prompt The Fed to consider cutting interest rates sooner.
OIL
Oil prices dropped by USD 0.67 to USD 69.44 per barrel at the start of European trading after a significant rise on Thursday. This movement indicates a mixed sentiment for oil.
Trump’s plan to increase tariffs on imports from Canada has created a positive sentiment since the U.S. heavily imports oil from its neighbor. On the flip side, concerns about an economic slowdown in the U.S. that could reduce oil demand are generating negative sentiment.
This suggests that if the U.S. economic data tonight comes in lower than the forecast, oil prices may face downward pressure.
EURUSD
The release of German retail sales data that exceeded expectations has led to a rebound in EURUSD during the European trading session, reaching a daily high of 1.04043.
Additionally, positive news from the UK-US trade negotiations has also contributed to favorable sentiment for EURUSD. If both nations can avoid a trade war, the European Union may follow suit.
Consequently, EURUSD could receive even more positive sentiment if tonight’s U.S. economic data is worse than the forecast. The release of Germany’s inflation data will also influence movements tonight.
GBPUSD
GBPUSD reversed course, rising to 1.26100 after previously dipping to 1.25725. The pair received positive sentiment after President Trump indicated that the UK and the U.S. are likely to reach a trade agreement without needing to raise import tariffs.
Given this context, if tonight’s U.S. economic data is worse than the forecast, GBPUSD could experience an additional boost in positive sentiment.
USDJPY
This currency pair exhibits significantly higher volatility than EURUSD and GBPUSD. During the European trading session, USDJPY turned upward to 150.686 after earlier dropping to 149.096. Its trading range reached 1,590 points (159 pips).
Both the U.S. dollar and the yen are considered safe havens, leading to high volatility. The yen is currently strong as the Bank of Japan (BoJ) is anticipated to raise interest rates soon. As a result, USDJPY remains close to its four-month low. If the U.S. economic data tonight is worse than the forecast, USDJPY could again face downward pressure.
Nasdaq
Nasdaq rebounded to 20,687 at the beginning of the European trading session after earlier falling to 20,516, its lowest level since November 20. The rebound occurred after Trump signaled that the UK and the U.S. may achieve a trade agreement without any tariff increases.
This development raises hopes for reaching trade agreements with other nations as well, providing positive sentiment for Nasdaq. If tonight’s PCE inflation data is released lower than the forecast, there is a chance that The Fed will cut interest rates more swiftly, potentially adding further positive sentiment for Nasdaq.
