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Market Review: Trump Tariffs, Fed Policy, Digital Assets, and Key Developments

4 min read

Market Performance Overview

The US Dollar Index saw a significant upward trend at the beginning of the week, fueled by trade agreements between the US and the EU, strong US economic data, and hawkish interpretations of Federal Reserve Chairman's statements. However, the dollar's strength waned at the end of the week due to weaker-than-expected non-farm payroll data, leading to a market repricing of rate cut expectations. The dollar closed the week at 98.66, up 1.03%.

Gold was initially negatively impacted by the dollar's strength, falling below the $3270 level. However, it rebounded strongly after the release of the non-farm payroll data, closing the week at $3363 per ounce, up 0.79%.

Non-dollar currencies faced pressure due to the dollar's strength, with the British pound and Australian dollar recording consecutive declines. However, these currencies rebounded at the end of the week as the dollar weakened.

Oil prices rose this week, supported by hopes of a ceasefire between Russia and Ukraine and easing global trade tensions. However, prices retreated at the end of the week after reports of a potential increase in OPEC+ production.

US stock markets saw a slowdown in gains, driven by escalating trade tensions fueled by Trump. The Dow Jones Industrial Average recorded its worst weekly performance since April. However, some individual stocks saw significant gains, such as Microsoft, Meta, and Figma.

Investment Bank Views

  • UBS: The current rise in the dollar's value may be short-lived.
  • Commerzbank: The dollar may fall if the Federal Reserve is inclined to cut interest rates sooner rather than later.
  • Barclays: Risks are tilted toward the Federal Reserve delaying interest rate cuts.
  • Societe Generale: Upcoming economic data will reshape expectations of a September rate cut by the Federal Reserve.
  • Goldman Sachs: The Federal Reserve is likely to restart the easing cycle in the fall.
  • Jefferies: The Federal Reserve intends to cut interest rates, but it needs a slowdown in job data to get the 'green light'.
  • Citi: Demand for quantitative funds seeking to enter Chinese A-shares is increasing.
  • UBS: International investor confidence in the Chinese market has strengthened.

Key Events of the Week

1. Trump Criticizes the Federal Reserve for Not Cutting Interest Rates

President Trump criticized the Federal Reserve for not cutting interest rates. Additional criticism came from board members. These events have sparked speculation about the central bank's independence and the influence of politics on its decisions.

2. Weak Job Data Fuels Expectations of Rate Cuts

Non-farm payroll data showed a significant slowdown in job growth, leading to increased expectations that the Federal Reserve will cut interest rates in the coming months. Trump responded to this data by accusing the Bureau of Labor Statistics of manipulating the data.

3. Trump Announces Retaliatory Tariffs on Multiple Countries

President Trump announced retaliatory tariffs on multiple countries, raising concerns about a global trade war and its impact on economic growth. These actions highlight the continued uncertainty in global trade relations.

4. Trump Excludes Refined Copper from Tariffs, Causing Copper Prices to Plunge

Trump's decision to exclude refined copper from tariffs caused copper prices to plunge, highlighting the impact of sudden policy decisions on commodity markets.

5. Worsening Humanitarian Crisis in Gaza

The worsening humanitarian crisis in Gaza has led to international intervention and calls for more aid.

6. Trump Sets Deadline for Russia-Ukraine Ceasefire

President Trump set a deadline for a ceasefire between Russia and Ukraine and threatened new sanctions on Russia.

7. Nvidia Denies Backdoors in its Chips

Nvidia denied the presence of any backdoors in its chips after concerns were raised by the Chinese government.

8. US Imposes Largest Sanctions Package on Iran in 7 Years

The US imposed its largest sanctions package on Iran in 7 years, targeting oil and shipping networks.

9. Bank of Japan Keeps Interest Rates Unchanged

The Bank of Japan kept interest rates unchanged, but raised inflation forecasts.

10. Dalio Completes Exit from Bridgewater Associates

Ray Dalio completed his exit from Bridgewater Associates, with Brunei's sovereign wealth fund becoming a major shareholder.

11. White House Releases Report on Digital Assets

The White House released a report on digital assets, but provided no substantive updates on bitcoin reserve plans.


Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. 

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