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27/02/2025 - 08:10 UTCThe US dollar posted a mild recovery against most major currencies on Wednesday, with the USDX bouncing from almost 11-week lows and gaining 0.21%, supported by a rise in treasury yields, weak U.S. economic data, persistent inflation, and concerns over U.S. trade tariffs which boost demand for safe haven assets such as the dollar.
Investors are watching for Friday's U.S. PCE inflation data, which will heavily influence the Federal Reserve's interest rate path. While recent weak economic reports have raised hopes for rate cuts, the Fed's inflation concerns make immediate action unlikely. The PCE, the Fed's key inflation metric, will provide vital consumer spending and price insights.
Wall Street saw another negative session on Wednesday with all three main stock indices seeing minor losses despite Nvidia's quarterly earnings report which offered some support to the tech sector. Despite Nvidia's strong quarterly forecast, indicating continued robust demand for AI infrastructure from tech giants like Microsoft and Amazon, concerns about overspending in the AI sector persisted. Nvidia's shares dipped slightly in after-hours trading, even after exceeding revenue expectations. Investors remain cautious, evidenced by the relatively flat performance of major Nvidia customers like Microsoft and Amazon, particularly after recent AI advancements from China's DeepSeek raised cost-effectiveness questions. While Nvidia's revenue soared, a projected margin squeeze due to the launch of its Blackwell chips further fueled investor caution.
Both Bitcoin and Ethereum experienced their third consecutive day of losses on Wednesday, with Bitcoin dropping to levels not seen since November. This downturn, marked by 5% and 6.39% declines respectively, is largely attributed to growing concerns over potential U.S. trade tariffs and fears of a slowing economy, prompting investors to seek safer investment options.
U.S. preliminary GDP numbers, weekly jobless claims, core durable goods orders, pending home sales and a series of speeches by FOMC members. For the week ahead some price action could be seen upon the release of the Core PCE Price Index, and the Chicago PMI.
The EUR/USD pair pulled back on Wednesday after former US President Donald Trump reaffirmed his commitment to imposing tariffs on the European Union, extending beyond Canada and Mexico.
In a move that underscores his aggressive trade stance, Trump introduced new tariff threats on Wednesday, proposing a 25% tariff on European goods. While details remain sparse, he specifically mentioned targeting automobiles and other key imports.
The number of nations exempt from US tariff threats is shrinking, raising concerns of a broader trade conflict. With the Euro now among the currencies exposed to heightened volatility, investors are bracing for potential market fluctuations driven by ongoing developments from Washington.
Gold stabilized on Wednesday after a decline the previous day. The drop came as traders reacted to weaker US consumer confidence data and renewed tariff threats from the Trump administration. Despite this, a sharp decline in US Treasury yields has bolstered expectations of a 25 basis points (bps) rate cut from the Federal Reserve (Fed) in June, providing support for gold prices and potentially setting the stage for a rebound.
Investors are closely watching March 4, when tariffs on Mexico and Canada are scheduled to take effect. Adding to market anticipation, the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, is set for release on Friday.
Oil prices dropped to two-month lows on Wednesday following an unexpected increase in U.S. fuel stockpiles, signaling potential demand weakness. Meanwhile, ongoing discussions regarding a peace deal between Russia and Ukraine continued to weigh on market sentiment.
The Energy Information Administration (EIA) reported surprise builds in U.S. gasoline and distillate inventories, despite an unexpected draw in crude oil stockpiles as refining activity increased.
Further downside risks for oil prices have emerged due to U.S. policies under President Donald Trump. Additionally, fresh U.S. sanctions on Iran have done little to offset broader supply concerns.
The US 500 traded between gains and losses on Wednesday and ended the session 0.12% lower as renewed tariff concerns dampened investor sentiment ahead of Nvidia’s highly anticipated earnings report.
Stocks surrendered most of their gains after former President Donald Trump announced plans to impose a 25% tariff on European Union imports, heightening fears of a global trade war. Although Trump had previously suggested reciprocal tariffs on EU goods, investors had hoped for a resolution that would prevent further deterioration in U.S.-EU trade relations.
Super Micro Computer surged over 12% after filing delayed financial reports, ensuring compliance with Nasdaq listing requirements.
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