The release of inflation data (Consumer Price Index/CPI) for the United States on Wednesday has stirred volatility in the financial markets. The CPI report for March revealed a year-on-year growth of 2.4%, which fell short of the Trading Central forecast of 2.5% YoY.
In addition, the core CPI, which excludes food and energy, was reported to have increased by 2.8%, also lower than the forecast of 3%. A continued decline in inflation could provide greater leeway for the Federal Reserve to reduce interest rates more swiftly.
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Market participants are anticipating that the Fed might cut interest rates three times this year. This sentiment, combined with ongoing trade war dynamics, is likely to impact market movements come Friday (April 11, 2025). There is a growing pessimism regarding the economic outlook of the United States due to the trade war, leading to a ‘dumping’ of the US dollar.
GOLD
The price of Gold (XAUUSD) has skyrocketed since last Wednesday, reaching an astonishing $3,220.08 per troy ounce today. This marks an all-time high, with prices having surged over $238, or 2,380 pips, since last Wednesday.
The escalating trade conflict between the US and China has significantly boosted demand for Gold as a safe haven. Additionally, expectations of three interest rate cuts from the Fed this year are contributing to a positive sentiment for Gold, which should continue to influence trading in the European session.
OIL
The price of Oil (CLS10) plummeted by $2.47 to $60.21 per barrel in Thursday’s trading. The intensifying trade war between the US and China is likely to trigger a global economic slowdown, exerting downward pressure on Oil prices.
A potential global economic slowdown heightens the risk of declining demand for Oil. This sentiment is expected to persistently weigh on Oil during the European trading session.
EURUSD
EURUSD surged by 1,840 points (184 pips) to 1.13838 in today’s trading. This is the highest level observed since February 2022.
The US dollar is currently under pressure due to the strains from the trade war with China, which could hinder economic growth. Moreover, the Fed is predicted to cut interest rates at least three times, adding extra pressure, thus creating a positive sentiment for EURUSD.
GBPUSD
The pressures facing the US dollar have also resulted in a rise for GBPUSD today, reaching 1.30470. In addition to the US dollar’s challenges, traders are watching for the upcoming release of economic growth data (Gross Domestic Product/GDP) for the UK at 13:00 WIB, which could act as a catalyst for GBPUSD.
Forecasts from Trading Central suggest that GDP for February is expected to grow by 0.1% month-on-month, a recovery from -0.1% the previous month. A release above the forecast could bolster positive sentiment for GBPUSD.
USDJPY
USDJPY fell by over 3,300 points (330 pips) during Thursday’s trading, continuing its decline today by more than 150 pips to 142.876. This marks the lowest level since early October 2024.
The risk of an economic slowdown in the US, coupled with expectations that the Fed will adopt a more aggressive stance on interest rate cuts this year, is pressuring USDJPY.
Nasdaq
The Nasdaq index experienced a decline on Thursday and further dropped to 18,070 today before slowly beginning to rebound. The trade war between the US and China has been a significant source of pressure for the stock index.
However, the market’s belief that there is a chance for the Fed to lower interest rates in June offers a glimmer of positive sentiment. Consequently, movements in the Nasdaq will likely remain volatile, with a tendency to be weighed down by profit-taking after a sharp increase last Wednesday.
