Dollar Hits 3-Year Low; Gold Surges (21-25 April)

The US dollar index closed near a 3-year low, pressured by trade policy uncertainty, Trump’s Fed criticism, and easing inflation.

The euro briefly hit its highest since Jan 2022 before easing after the ECB cut rates and flagged weak growth. The pound gained on cooling inflation, while the yen hovered near 7-month highs on steady Japan inflation and tariff concerns.

Gold ended at $3,226 after hitting records, driven by safe-haven demand and trade fears. Powell signaled caution on rate cuts due to tariff-driven inflation, prompting profit-taking. Silver slipped to $32.50 as trade tensions escalated.

Brent crude rose 3% to $67, up 5% weekly, lifted by US-Iran tensions and OPEC+ cut plans, despite growth concerns.

US 10-year yields fell to 4.33% after a 90-day tariff delay; 2-year yields dropped to 3.80%. In Europe, German 10-year yields slid to 2.48% following the ECB’s rate cut.

China GDP (YoY) (Q1)

China’s economy grew 5.4% year-on-year in Q1 2025, exceeding expectations and marking its fastest pace in 18 months. Growth was driven by government stimulus, robust industrial output, strong retail sales, and a drop in unemployment. Exports surged in March as firms front-loaded shipments ahead of incoming U.S. tariffs. While officials described the quarter as a “steady start,” rising trade tensions with the U.S. have increased expectations for further policy support.

UK CPI (YoY) (Mar)

UK inflation slowed to 2.6% in March from 2.8% in February, below both market forecasts and BoE projections. The decline was led by lower prices in recreation, transport, and accommodation, alongside continued easing in food inflation. Fuel prices dropped sharply, though clothing and footwear costs rose with the seasonal shift. Monthly CPI rose 0.3%, while core inflation edged down to 3.4% from 3.5%.

EU CPI (YoY) (Mar)

Eurozone annual inflation eased to 2.2% in March from 2.3% in February, in line with flash estimates. Energy and services inflation declined, while food inflation ticked higher. Core inflation dropped to 2.4%, the lowest since October 2021. Inflation fell in Germany, Spain, and Belgium, remained flat in France, and rose in Italy.

US Retail Sales (MoM) (Mar)

U.S. retail sales rose 1.4% in March, the strongest monthly gain since January 2023, topping forecasts. The increase was driven by a 5.3% jump in auto sales, likely ahead of new tariffs. Excluding autos, sales were up 0.5%. Broad gains were seen in restaurants, electronics, and building materials, while gas station and furniture sales declined. Core retail sales rose 0.4%.

Deposit Facility Rate (Apr)

The ECB cut its main interest rates by 25bps, lowering the deposit rate to 2.25% and the refinancing rate to 2.40%. The decision reflects growing confidence that inflation is falling back toward the 2% target, as wage growth and price pressures ease. However, the ECB maintained a cautious tone, citing global trade risks and weak growth, and emphasized a data-driven approach going forward.

Initial Jobless Claims

U.S. initial jobless claims dropped by 9,000 to 215,000 in mid-April, the lowest in two months and below expectations. However, continuing claims rose by 41,000 to 1.885 million. Federal claims increased slightly to 548, the second-lowest since Trump took office, though recent DOGE layoffs may not yet show up due to severance delays.

Philadelphia Fed Manufacturing Index (Apr)

The Philadelphia Fed Index plunged to -26.4 in April from 12.5 in March, far below the forecast of 2 and marking the sharpest drop since April 2023. New orders fell to -34.2, the weakest since April 2020, while shipments and employment remained soft. Despite ongoing price pressures, future growth expectations remained subdued.

Currencies

The US dollar index ended the week near a three-year low, pressured by trade uncertainty, soft inflation, and criticism from President Trump. Markets are increasingly concerned about the dollar’s global reserve status.

The euro climbed to its highest since January 2022 before easing to $1.1340 after the ECB cut rates by 25bps to 2.25% and softened its policy language. The ECB also cited trade tensions and slowing growth.

The British pound gained further, helped by cooling UK inflation, with CPI at 2.6% and services inflation down to 4.7%. Markets now expect 86bps of BoE rate cuts this year, with odds rising for a fourth cut in December.

The Japanese yen held near seven-month highs as March core CPI rose to 3.2%. The BoJ is expected to hold rates at 0.5%, though U.S. tariffs could pressure Japan’s export-driven outlook.

Commodities

Gold ended the week at $3,226 per ounce, easing from record highs reached earlier as investors took profits amid ongoing uncertainty over U.S. trade policy. Safe-haven demand had surged on news that the Trump administration is considering new tariffs on semiconductors and pharmaceuticals, while delaying others on autos and certain tech products. Fed Chair Powell signaled a cautious stance, warning tariffs could raise inflation and slow growth. Market focus also remains on U.S.-China trade talks, with China expressing conditional willingness to resume negotiations.

Silver closed near $32.50 per ounce, retreating from two-week highs following a strong rally. It tracked gold’s movements, supported by trade-driven safe-haven demand before profit-taking kicked in. President Trump ordered a new probe into tariffs on key goods, prompting China to demand a clearer U.S. commitment before restarting talks. Powell’s warning on inflation and economic risks from tariffs added to market caution.

Brent crude rose nearly 3% to $67 per barrel on Thursday, supported by new U.S. sanctions on Iran’s oil sector and a China-based refinery. OPEC+ also committed to deeper cuts by members like Iraq and Kazakhstan. Despite this, major institutions like OPEC, IEA, and JPMorgan lowered their oil demand outlooks with U.S.-China slowdown concerns. U.S. crude inventories rose, but gasoline and distillate stocks declined. Brent marked a 5% weekly gain, its first in three weeks.

Equities

U.S. stock indices reversed early-week gains and finished lower as trade tensions resurfaced. The Nasdaq fell 2%, the S&P 500 lost 1.2%, and the Dow declined 2.5%. Meta led losses with a 12.8% drop, followed by Nvidia (-7%), Google (-3%), and Amazon (-7%). In contrast, Apple and Netflix outperformed, both rising around 4% on the week.

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