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28/02/2025 - 08:16 UTCThe US dollar gained against most major currencies on Thursday, with the USDX up by another 0.74% after hitting 11-week lows earlier this month. The move came as Trump on Thursday reaffirmed that, on March 4th, the U.S. will enact a 25% tariff on Mexican and Canadian imports and a 10% tariff on Chinese goods, citing concerns over fentanyl and other illegal drug inflows. Thursday’s U.S. GDP release showed the U.S. economy grew at an annualized rate of 2.3%, as predicted. However, this is a decrease from the prior period's 3.1% growth, suggesting a deceleration in economic expansion.
A sharp sell-off on Wall Street, triggered by Nvidia's stock decline, was followed by a decline in the Japan 225 to its lowest point since mid-September 2024. This occurred as investors also digested Tokyo's February inflation figures, which showed core inflation slowing to 2.2%.
Wall Street suffered a sharp decline on Thursday, primarily due to Nvidia's sharp 8.5% stock decline, despite surpassing earnings expectations. Concerns regarding shrinking profit margins and AI chip market challenges were the main factors. The anticipation of upcoming inflation data further contributed to investor caution. The sell-off impacted other tech companies, with Broadcom, AMD, and Salesforce also reporting losses.
Concerns over potential U.S. trade tariffs and a slowing economy triggered a sharp decline in cryptocurrency markets on Friday, with Bitcoin falling below $80,000 and Ethereum also experiencing significant losses, as investors sought safer investment options.
Financial markets are keenly anticipating Friday's U.S. PCE inflation report, as it holds the key to the Federal Reserve's future interest rate policy. While recent economic weakness has sparked speculation about potential rate cuts, the Fed's persistent inflation worries are creating uncertainty. The PCE data, which offers critical insight into consumer spending and price pressures, will be pivotal in shaping market expectations. For Friday, some price action could also be seen upon the release of the German Preliminary CPI, the Chicago PMI, Canada’s GDP and U.S. personal spending and personal income numbers.
The EUR/USD pair declined sharply on Thursday, dropping nearly 0.9% and falling below the 1.0400 mark for the first time in almost two weeks as concerns over potential US tariffs on European goods adding downward pressure.
Recent US economic data suggests inflationary risks are building. Q4 GDP growth exceeded expectations, coming in at 2.4% quarter-over-quarter versus the anticipated 2.2%. The annualized rate held steady at 2.3%, signaling resilience in the US economy.
Durable Goods Orders surged 3.1% month-over-month in January, significantly outpacing the 2.0% forecast and rebounding from a revised -1.8%.
Investors are now focused on Friday’s release of the US PCE Price Index, the Federal Reserve’s preferred inflation gauge.
Gold extended its losses on Thursday, dropping over 1%. The decline follows remarks from US President Donald Trump, who introduced uncertainty regarding upcoming tariffs during a cabinet meeting on Wednesday. His statements left investors uncertain about which levies would be applied, when they would take effect, and which countries would be impacted.
The renewed uncertainty surrounding trade policies has pressured gold prices lower, as investors weigh the potential economic implications of the shifting tariff landscape.
Oil prices surged near 2% on Thursday as concerns over supply disruptions intensified following US President Donald Trump’s decision to revoke Chevron’s license to operate in Venezuela.
Meanwhile, investors remained attentive to potential peace negotiations in Ukraine, which could influence Russian oil supply levels.
The revocation of Chevron’s license means the company can no longer export Venezuelan crude. Should state-owned PDVSA take over these exports, US refineries will be unable to purchase the oil due to existing American sanctions.
During intraday trading, oil prices rose further after Reuters reported that OPEC+ is debating whether to proceed with planned production increases in April or maintain current levels. This uncertainty stems from fresh US sanctions on Venezuela, Iran, and Russia.
The US 500 closed sharply lower on Thursday, weighed down by renewed tariff threats and a decline in Nvidia as concerns over the chipmaker’s profit margins overshadowed its strong earnings and revenue guidance.
Nvidia plunged more than 8%, dragging down the broader tech sector, as its Q1 profit margin forecast missed expectations despite strong Q4 results and robust revenue guidance. The company cited increased costs related to its new data center hardware and rising employee compensation as contributing factors.
President Trump confirmed that a proposed 25% tariff on Canadian and Mexican goods would take effect on March 4, citing concerns over illicit drug trade.
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