The financial markets are navigating turbulent waters as fears of a global tariff war and concerns over the US economic slowdown have sparked an uptick in the US Dollar. These developments come amid rising trade tensions, primarily fueled by the US-China rivalry. As the economic landscape shifts, Japanese Yen buyers remain resilient, betting on a policy divergence between the Federal Reserve and the Bank of Japan. Meanwhile, the complexities of China's industrial policy and overcapacity issues contribute to sustained trade tensions.
In response to the escalating trade conflict, continued economic stimulus is anticipated to counterbalance the effects of the expected US-China trade war throughout the year. The moderation in the core index reflects a temporary retreat in categories that experienced significant growth in January. Meanwhile, President Trump's "America First" policy could potentially reset EU-China relations, impacting global trade dynamics.
President Trump's impending tariffs have heightened demand for the US Dollar as a safe haven asset. This surge comes despite disappointing Chinese inflation data, which has negatively impacted the Australian Dollar. The USD/JPY currency pair is showing signs of recovery, moving above 147.50 early Monday. Bitcoin is hovering around $82,000 after experiencing a sharp decline of nearly 15% last week, while Ethereum and Ripple have followed suit, plummeting by approximately 20% and 28%, respectively.
As the US-China competition continues to intensify under President Trump's foreign policy directives, trade tensions are expected to persist. China's rise as a competitor in various sectors, coupled with its industrial policies, remains a contentious issue. In parallel, gold prices have maintained a stable range above $2,900, signaling a cautious start to the new week on Monday.
The consumer price inflation began robustly in 2025 but appears to have cooled in February, indicating a potential shift in economic momentum. This moderation may reflect adjustments in market categories that previously saw rapid price increases. Concurrently, the global markets are closely monitoring the developments in trade policies and economic indicators, which are poised to influence international financial dynamics.