US dollar hovers at four-month low on growth concerns
The US dollar declined in European trade on Monday against a basket of major rivals, on track for the sixth loss in a row, about to plumb four-month lows amid concerns about US growth due to Trump’s trade policies.
The US economy added less jobs than expected in February, bolstering the odds of a Fed rate cut during the first half of the year, with traders now waiting for US inflation data this week to gather more clues.
The Index
The dollar index fell 0.35% today to 103.56, with a session-high at 104.03.
On Friday, the index lost 0.25%, the fifth loss in a row, plumbing four-month lows at 103.46 following weak US labor data.
The index lost 3.4% last week, the fourth weekly loss in five weeks, and the heftiest since November 2022.
Growth Concerns
Investors are worried about slower US growth after aggressive tariffs on major trade partners, while recent labor data and government layoffs raised more concerns.
US Treasury Secretary Scott Bessent said the economy might slow down as it shifts from government spending to private investments, and reaches a more sustainable balance.
He believes that some tariff levels will always be necessary to fix some economic imbalances around the world and secure more stable supply chains.
President Trump said during a Fox News interview that the US is undergoing a transition phase, with return of wealth to the US through trade and economic policies, including tariffs to boost local industry.
US Rates
Fed Chair Jerome Powell said it remains to be seen whether Trump’s tariff plans will be inflationary.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in March stood at just 3%.
Now investors await important US inflation data this week to gather more clues.
Silver backs off two-week high on Chinese demand concerns
Silver prices fell in European trade on Monday on track for the third straight loss away from two-week highs on profit-taking, amid concerns about Chinese growth and weaker silver demand.
The white metal’s losses were stymied by the US dollar's decline against major rivals amid mounting concerns about the US economy ahead of inflation data this week.
Prices
Silver prices fell 0.6% today to $32.33 an ounce, with a session-high at $32.67.
On Friday, silver lost 0.35% on profit-taking away from two-week highs at $32.77.
Silver tumbled 4.5% last week, the sixth weekly loss in seven weeks, and the largest in 2025.
The huge gains came as both the dollar and US treasury yields swooned, while Chinese stimulus hopes rebounded.
Deflationary Pressures
Recent data showed China’s consumer prices slowed down to 13-month slows in February, while producer prices contracted for the 30th month in a row.
Such deflationary pressures will no doubt impact economic activities in China and actual demand on precious metals.
US Dollar
The dollar index fell 0.35% on Monday on track for the sixth loss in a row, plumbing four-month lows at 103.46 against a basket of major rivals.
A weaker dollar makes greenback-denominated metals cheaper to holders of other currencies.
Investors are concerned that Donald Trump’s aggressive trade policies would hurt growth both in the US and globally.
Gold moves in a positive zone as the dollar weakens
Gold prices rose in European trade on Monday to near a week high, while holding its ground above $2900 with the dollar weakening.
Now investors await US inflation data for February, expected to offer fresh pricing for the odds of a Fed rate cut in March.
The Price
Gold prices rose 0.35% today to $2918 an ounce, with a session-low at $2896.
Gold lost 0.1% on Friday on profit-taking away from a week high at $2930.
Gold rallied 1.8% last week, the ninth weekly profit in two and a half months on haven demand.
The Dollar
The dollar index fell 0.35% on Monday on track for the sixth loss in a row, plumbing a four-month trough at 103.46 against a basket of major rivals.
A weaker dollar makes greenback-denominated gold futures cheaper to holders of other currencies.
Investors are concerned that Donald Trump’s aggressive trade policies would hurt growth both in the US and globally.
US Rates
Fed Chair Jerome Powell said it remains to be seen whether Trump’s tariff plans will be inflationary.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in March stood at just 3%.
Now investors await important US inflation data this week to gather more clues.
The SPDR
Gold holdings at the SPDR Gold Trust fell 4.3 tons on Friday, the third drop in a row to a total of 894.34 tons, the lowest since February 20.
Euro rises after best weekly performance in 16 years
The euro rose in European trade on Monday against a basket of major rivals, maintaining gains for the second session against the dollar, and about to touch four-month highs after marking the best weekly performance in 16 years.
Following the European Central Bank’s latest policy meeting, the odds of a rate cut in April declined as traders now await more data and clues.
The Price
The EUR/USD pair rose 0.4% today to $1.0871, with a session-low at $1.0827.
The euro rose 0.45% on Friday against the dollar, marking the fourth profit in five days, and hitting a four-month high at $1.0888 following weak US jobs data.
The euro rose 4.4% last week against the greenback, the best weekly performance since March 2009.
The gains come amid record fiscal spending plans in Germany, which boosted inflation forecasts and might force the European Central Bank to tighten its policies once more to face inflationary pressures.
European Rates
The European Central Bank cut main borrowing rates by 25 basis points to 2.5% as expected, noting in its statement that inflation has slowed down in line with forecasts.
The ECB now expects inflation to hit 2.3% this year, before slowing down to 1.9% in 2026, before rising to 2% in 2027.
The ECB reduced forecasts for eurozone economic growth in 2025 to 0.9%, and in 2026 to 1.2%, and in 2027 to 1.3%.
ECB President Christine Lagarde said the decision to cut interest rates was in line with economic developments and data in the eurozone.
She noted that inflation started to fall considerably in line with forecasts, and will likely settle at the targets sustainably.
Reuters reported that the ECB policymakers expect a pause in rate cuts in April before embarking on another round of cuts.
The odds of an ECB rate cut in April is now less than 50%, compared to a 60% chance next week.