US producer prices slow down unexpectedly in March
US producer prices rose 2.7% y/y in March, slowing down from 3.2% in the previous reading, while analysts expected a 3.3% rise.
Core prices excluding food and energy, rose 3.3%, down from 3.5% in February, and below estimates of 3.6%.
US dollar extends losses to three-year nadir on the erupting trade war
The US dollar tumbled in Asian trade on Friday against a basket of major rivals, expanding losses for the second straight session and plumbing three-year lows, and on track for the biggest weekly loss since 2022.
It comes as the US-China trade war deteriorates, which casts long shadows on the world’s top two economies, and heaps pressure on US and Chinese financial assets.
The Index
The US dollar index fell 1.9% today to 99.01, an April 2022 low, with a session-high at 100.91.
On Thursday, the index lost 1.95%, the second loss in three days, and the biggest in three years as investors flee US assets.
Weekly Trades
The US dollar index is down 3.75% so far this week, on track for the third weekly loss in a row, and the heftiest since Novemer 2022.
Trade War
In yet another escalation to the devastating US-China trade war, Beijing raised tariffs on all US goods from 84% to 125%.
It’s in response to US President Donald Trump’s 145% tariffs on US goods, which were confirmed yesterday.
The latest escalation comes after a long series of reciprocal measures between both sides starting January 2018, when the US imposed tariffs on Chinese goods and accused China of unfair trade practices.
China asserted it will “fight till the end” and warned Trump that any escalation will be faced with similar responses.
US Assets
Investors are rapidly losing confidence in US assets and fleeing the American stock and bond markets towards other safe havens, in turn sending gold prices to successive record highs.
Fed Minutes
The latest Federal Reserve’s meeting minutes showed that members are all concerned about inflation and lower growth risks due to the tariff war.
Chicago Fed President Austin Goolsbey said on Monday that while corporations are concerned about tariffs, the Fed needs to look at actual data before responding.
Recent data showed US consumer prices slowed down more than expected in March, reducing inflationary pressures on the Federal Reserve.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May rose from 15% to 35%, while the odds of a June rate cut rallied to 91%.
China hikes tariffs on US goods to 125% in response to Trump
In yet another escalation to the devastating US-China trade war, Beijing raised tariffs on all US goods from 84% to 125%.
It’s in response to US President Donald Trump’s 145% tariffs on US goods, which were confirmed yesterday.
The Conflict’s Background
The latest escalation comes after a long series of reciprocal measures between both sides starting January 2018, when the US imposed tariffs on Chinese goods and accused China of unfair trade practices.
China asserted it will “fight till the end” and warned Trump that any escalation will be faced with similar responses.
The tit-for-tat attacks put more pressure on global trade and pose threats to both the US and Chinese economies.
Already the reciprocal tariffs started to tank trade on both sides, while particularly hitting the tech and agricultural sectors.
Analysts also expect slower global growth and higher prices for consumers in both countries.
Gold rises above $3200 an ounce for first time ever
Gold prices rose in European trade on Monday and expanded the gains for the third straight session, trading above $3200 an ounce for the first time ever and heading for the biggest weekly profit this year on haven demand as the US-China trade war erupts.
The huge gains are boosted by the dollar's tumble against major rivals, due to concerns about a potential US recession this year.
The Price
Gold prices rose 1.4% today to $3220 an ounce, a record high, with a session-low at $3175.
On Thursday, gold rose 3.1%, the second profit in a row, marking a fresh record high.
Weekly Trades
Gold prices are up 6% so far this week on track for the biggest weekly profit in 2025.
The Trade War
US President Donald Trump escalated the devastating trade war with China by announcing 145% tariffs on Chinese products.
The tariffs will be immediate and are a response to China's disrespect to global markets as Trump described it.
Simultaneously, Trump announced a 90-day hold on tariffs for most other countries .
The Chinese government announced fresh retaliatory 84% tariffs on US products, deepening the trade war.
Investors are still concerned about the trade escalation between the US and China in particular, and from any potential recession due to the trade war, in turn impacting demand.
US Dollar
The dollar index tumbled 1.2% on Friday on track for the second loss in a row, plumbing a 21-month trough at 99.71 against a basket of major rivals.
A weaker dollar makes the greenback-denominated futures cheaper to holders of other currencies.
The huge losses come as investors lose confidence in US assets and flee the American stock and bond markets towards safe havens such as the Swiss franc and gold.
Fed Minutes
The latest Federal Reserve’s meeting minutes showed that members are all concerned about inflation and lower growth risks due to the tariff war.
Chicago Fed President Austin Goolsbey said on Monday that while corporations are concerned about tariffs, the Fed needs to look at actual data before responding.
Recent data showed US consumer prices slowed down more than expected in March, reducing inflationary pressures on the Federal Reserve.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May rose from 15% to 35%, while the odds of a June rate cut rallied to 91%.
SPDR
Gold holdings at the SPDR Gold Trust rose 12.62 tons yesterday, the biggest increase since March 21 highs, to a total of 949.71 tons, the highest since September 2022.