DXY Falls with US-China Trade Conflict (14 - 18 April)

The dollar index fell to 99, a near three-year low, as China raised tariffs to 125% in response to the U.S.’s 145% hike, intensifying trade tensions.

The euro jumped above $1.14, the pound passed $1.30, and the yen gained on safe-haven demand.

Gold hit a record $3,250/oz, silver rose above $31.20, both boosted by risk-off sentiment and Fed rate cut hopes. Brent crude rose 2.3% to $64.70 on U.S. threats against Iranian oil, but ended the week lower on trade and supply worries. U.S. 10-year yields climbed to 4.48%, 2-year to 3.96%, while Japan’s 10-year yield rebounded to 1.30%.

RBNZ Interest Rate Decision

The Reserve Bank of New Zealand cut its official cash rate by 25bps to 3.50% in April, as expected, bringing total cuts since August to 200bps. This is the lowest level since October 2022, with global trade war concerns. Inflation remains within the 1–3% target, and core inflation aligns with medium-term goals. However, external trade barriers pose downside risks. Annual inflation was 2.2% in Q4 2024, the lowest since Q1 2021, while GDP grew 0.7% after two prior quarterly contractions.

US CPI (Mar)

U.S. inflation fell to 2.4% in March from 2.8%, below the 2.6% forecast, marking the lowest since September. Gasoline prices dropped 9.8%, while natural gas rose 9.4%. Inflation eased for housing (4% vs 4.2%), used cars (0.6% vs 0.8%), and transport (3.1% vs 6%). Food inflation rose to 3% (from 2.6%). Monthly CPI fell 0.1%, the first decline since May 2020, against a forecasted 0.1% rise. Core inflation dropped to 2.8%, with core CPI rising just 0.1% MoM, below the expected 0.3%.

Initial Jobless Claims

Initial claims rose by 4,000 to 223,000 in early April, in line with expectations. Continuing claims dropped by 43,000 to 1.85 million, exceeding the 1.88 million forecast, indicating some recovery in hiring. Federal program claims, closely watched due to DOGE firings, rose slightly to 508, the lowest under Trump. Many terminated employees remain temporarily ineligible due to severance packages.

UK GDP (Feb)

The UK economy grew 0.1% in Q4 2024, unchanged from initial estimates, following flat growth in Q3. Services rose 0.1% (vs 0.2% initial), driven by health and social care. Construction rose 0.3%, while industrial output fell 0.4%, less than the prior -0.8% estimate, led by metals (-2.9%) and transport equipment (-2%). Household spending was revised up to 0.1%, while government spending increased by 0.5% on higher activity in public services.

US PPI (Mar)

U.S. producer prices unexpectedly fell 0.4% in March, the first drop since October 2023, defying a 0.3% rise forecast. Goods prices dropped 0.9%, led by an 11% fall in gasoline. Services fell 0.2%, dragged by machinery and vehicle wholesaling (-1.3%). Air travel, retail, and lodging also declined. Core PPI rose just 0.1% MoM (vs 0.3% expected). Annual PPI eased to 2.7% (vs 3.3% forecast), and core PPI slowed to 3.3% from 3.5%.

German CPI (Mar)

Germany's annual inflation eased to 2.2% in March, down from 2.3% in February, the slowest since November. Services inflation slowed to 3.5%, and energy prices dropped 2.8%. Food inflation picked up to 3% (from 2.4%). Core inflation eased to 2.6%, the lowest since June 2021. Monthly CPI rose 0.3%, following 0.4% in February. The EU-harmonised rate fell to 2.3% YoY (from 2.6%), with a 0.4% MoM increase.

Currencies

The U.S. dollar index dropped to around 99, its lowest level in nearly three years, as escalating trade tensions and economic uncertainty drove investors away from U.S. assets. On Friday, China retaliated against Washington’s tariff hike by increasing levies on U.S. goods to 125%, up from 84%, after the U.S. imposed tariffs of up to 145% on Chinese imports. The dollar recorded a 2% weekly loss, its steepest since November 2022, with fears of prolonged trade disruption and recession risks.

The euro surged above $1.14 for the first time since late January 2022, supported by broad dollar weakness and improving investor sentiment toward the Eurozone. The single currency is on track for a weekly gain of over 3.5%, with traders increasingly shifting exposure away from U.S. assets due to heightened geopolitical risks.

In the UK, the British pound climbed past $1.30, approaching the six-month high of $1.31 seen on April 3. The rally followed a strong 0.5% growth in February GDP, which was five times higher than forecast, driven by gains across all major sectors. Despite the upbeat data, traders have slightly lowered their expectations for Bank of England rate cuts this year, now pricing in 66 basis points of easing for 2025, down from 79bps earlier.

The Japanese yen strengthened to its highest level since late September 2024, reflecting increased demand for trusted assets as global trade tensions intensified. The yen’s advance was also supported by a sharp selloff in U.S. Treasuries, as investors moved capital into traditionally safer currencies amid rising market volatility.

Commodities

Gold jumped above $3,250 per ounce on Friday, hitting a new record as safe-haven demand rose sharply with U.S.-China trade tensions and a weaker dollar. China hiked tariffs on U.S. goods to 125% from April 12, following Washington’s 145% hike, affecting nearly $700 billion in trade and driving investors into gold.

Silver also gained, rising above $31.20 for a third session, supported by broad dollar weakness, trade fears, and soft U.S. core inflation data, which boosted expectations for Fed rate cuts. The Fed’s silence on long-term yield control added to the appeal of non-yielding assets.

Brent crude rose 2.3% to $64.70 on Friday after the U.S. signaled plans to block Iranian oil exports. However, trade tensions and an unexpected OPEC+ output increase weighed on sentiment. Brent still ended the week down 1%, after a 10% drop the previous week.

Equities

U.S. stocks ended the week with a strong rally. The Nasdaq gained around 7% last week, while the Dow rose 5%, and the S&P 500 added 6%. Apple was one of the standout stocks, leading the rally with a 6% gain, while Nvidia shined with a remarkable 17% increase.

Latest Analysis

High Oil, Limited Relief (30 March-3 April)

Energy tension continues to influence price behavior across currencies, commodities, and bond markets.

Detail

Yields Refuse to Step Back (30.03.2026)

The dollar index held above the 100 mark after four consecutive sessions of gains, supported by strong demand.

Detail

Ten More Days, Less Policy Clarity (27.03.2026)

The dollar index traded just below 100, extending gains after three consecutive sessions as Middle East tension supported demand.

Detail