While geopolitical risks remain high, especially after Trump's war of words with Ukrainian President Volodymyr Zelensky, market concerns about the US economy may once again push investors to increase expectations for rate cuts, even if inflation data do not support such expectations.

But the US dollar is currently at a two-month low and may rebound in the event of further deterioration in the geopolitical situation. In particular, if the relationship between Trump and Zelensky deteriorates further, or tensions between the US and the EU increase, or a new round of tariffs are announced, it may drive funds back to the US dollar.

Inflation data from other countries is also in the spotlight. Australia will release January CPI data on Wednesday, and investors will pay close attention, especially after the Reserve Bank of Australia's recent hawkish rate cut.

The Bank of Japan may welcome strong inflation data as the bank hopes to gradually return to normal monetary policy after years of monetary easing. In the past three months, the CPI in Japan has been rising in both the national and Tokyo regions, and the economy has continued to grow.

In addition, Canada's fourth-quarter GDP data will be released on Friday, and investors will pay attention to whether the Bank of Canada will cut interest rates further.

Last week, US stocks fell sharply, continuing the recent selling trend. Markets were hit by a series of weak economic reports and continued to fall before the end of the week. The three major stock indexes fell sharply after the release of economic data and fell further. The S&P 500 fell 104.01 points, or 1.71%, to 6,013.46; the Nasdaq Composite fell 434.97 points, or 2.20%, to 19,524.01; and the Dow Jones Industrial Average fell 751.33 points, or 1.70%, to 43,428.02.

Gold prices retreated before the weekend as investors took profits after setting a record high of $2,9955 in the previous trading day, but rose for the eighth consecutive week, up about 1.9% this week, helped by strong safe-haven demand triggered by U.S. President Trump's tariff plan. Gold prices set two record highs last week, breaking through $2,950 an ounce, as uncertainty about global economic growth and political turmoil consolidated investors' appetite for gold.

Silver prices retreated before the weekend, failing to take advantage of falling US yields. Yields plunged nearly 8 basis points to 4.431% on the 10-year Treasury note. Silver traded at $32.54, up 1.13% for the week.

The dollar fell against a number of commodity-linked currencies including the euro, pound, yen and Australian dollar last week as investors consolidated positions ahead of the weekend, looking forward to more inflation data and keeping a close eye on tariff headlines.

The dollar's recent performance has shown some weakness, influenced by multiple factors, including weak domestic economic data, weaker-than-expected performance of the US stock market, progress in US-China trade negotiations and changes in Fed policy. Although the dollar has shown some resilience at certain moments, shifts in market sentiment and changes in economic data are weighing on the dollar.

Despite the volatile price action, EUR/USD ended the weekend with a technical pullback after returning above the 1.0500 mark. Investors are also keeping an eye on Sunday's German election, where polls suggest a victory for the conservative coalition, which could play a key role in influencing their expectations for future economic growth.

USD/JPY resumed its multi-week decline, with the yen rising after a sell-off in Japanese government bonds sent yields to 2009 highs, trading near the 149.00 area heading into the weekend, all the while accompanied by steady expectations of further BoJ tightening. So far in February, the yen has gained about 3.9% against the dollar.

Despite minor volatility heading into the weekend, GBP/USD managed to extend its bullish trend, rising to 1.2678 at one point, a new high since December 19, 2024, on the back of USD weakness. Although UK inflation data provided some upward momentum, the pound's gains were mainly due to USD weakness. The key 1.2600 level was breached for the third consecutive week.

The dollar also gained against commodity currencies such as the Australian dollar, New Zealand dollar and Canadian dollar, but was slightly lower against the Swiss franc, trading at 0.8972. Good data releases from Australia, coupled with a hawkish rate cut by the Reserve Bank of Australia, helped AUD/USD break above the 0.6400 mark for the first time, while securing a third consecutive week of gains.

International oil prices closed down more than $2 last Friday and fell on a weekly basis as investors grapple with the fading risk premium in the Middle East and uncertainty over a potential peace deal in Ukraine. Brent crude oil closed down 0.993% for the week, settling at $73.86 per barrel; WTI crude oil fell 0.747% for the week, settling at $70.17.

Bitcoin rebounded above $98,000 before the weekend. U.S. President Trump will negotiate with Russian President Putin to end the Russia-Ukraine conflict, and the Sino-U.S. trade war is positive, stimulating buying of risky assets. However, market analysis rarely points out that Bitcoin may be artificially controlled in the near future, and some "mysterious" players outside of institutions and retail investors have been selling.

The trend of U.S. Treasury yields is being reassessed, and the market believes that inflation threats related to tariffs may further delay the Fed's rate cuts. Trump's tariff policy and domestic tax cuts complicate the Fed's efforts to reduce inflation, leading investors to demand higher "term premiums," pushing up long-term U.S. Treasury yields. Most strategists expect U.S. Treasury yields to remain stable or rise in the next three months to a year. The 10-year Treasury yield is expected to remain stable at 4.53% in three months and 4.50% in six months, up from 4.40% and 4.35% in last month's survey, respectively. More than half of the respondents raised their January forecasts.

Outlook for this week:

In the past week, Trump's tariff threats, the explosion of Chinese technology stocks and the major turning point in the situation between Russia and Ukraine caused market turmoil. Looking forward to the new week, Germany is about to hold elections, and US inflation will also be in the spotlight. The market is looking forward to the release of the PCE report.

Germany is about to usher in what may be the most important parliamentary elections in the country's history, as the elections may overthrow some parties while supporting others. In the 21st round of elections scheduled for February 23, 2025, about 59.2 million people are eligible to vote.

In terms of data, the importance of the US fourth quarter 2024 real GDP revised value report, followed by the US personal consumption expenditure report, including the Fed's favorite PCE price data. The market currently expects the annual rate of the US PCE price index to slow by 0.1 percentage point to 2.5% in January, and the core PCE to slow by 0.2 percentage point to 2.6%, both of which are still some distance from the central bank's 2% target. The latest minutes of the Federal Reserve meeting show that officials tend to keep interest rates unchanged. Investors focus on the German election and US personal consumption expenditure inflation

In addition, the game between the United States, Europe, Russia and Ukraine has become the focus of the market recently. It is reported that Ukraine has obtained the text of the new version of the mineral resources agreement proposed by the United States, and a Ukrainian government expert group will be launched this week to work on reaching a mineral agreement with the United States in exchange for US support.

The dollar has performed mediocre in the past week, falling to a level not seen since early December 2024. As uncertainty about tariffs persists, further retreats mask the Fed's latest assurances on maintaining a cautious monetary policy stance.

The dollar index has been weak for the third consecutive week, this time falling to a two-month low in the 106.30 area, and there has always been a lack of clarity in Trump's trade policy. The short-term outlook for the dollar is affected by multiple factors, including progress in US-China trade negotiations, weak US economic data and changes in Fed policy. Despite a possible short-term rebound on the technical side, the dollar still faces downside risks. Changes in market sentiment and upcoming economic data will continue to affect the trend of the dollar. This will directly affect the short-term trend of the dollar, determining whether it can break out of the current range and resume its upward trend.

The German election will affect the outlook for EUR/USD, of course. If something unexpected happens. Sunday's German election may produce a coalition government led by the Conservative Party. Investors want to see Germany revive its stagnant economy to help the outlook for EUR/USD. EUR/USD is still fluctuating in a range, but there may be a possibility of a breakout. In short, the EUR/USD exchange rate is more likely to rise above the 1.05 mark than to fall below the 1.02 support level.

The current market generally expects that the Bank of Japan may implement an interest rate hike before September. This expectation of an interest rate hike has become an important support factor for the strength of the yen, and has also put relative appreciation pressure on the yen in the USD/JPY exchange rate. Overall, the trend of the USD/JPY is affected by multiple factors. In the short term, USD/JPY may continue to face downward pressure, especially after the technical breakthrough of the 150.00 mark, the market may continue to move closer to the 140-142 level. However, with the continued rise in Japanese inflation data and the market's expectations for the Bank of Japan to raise interest rates, the yen is still in a relatively strong position.

Due to the weakness of the US dollar, the GBP/USD exchange rate once rose to 1.2678, setting a new high since December 19, 2024. The weakness of the US dollar is partly due to changes in Trump's policies and warming relations with Russia. In addition, the weakness of US economic data has further suppressed the US dollar. From a technical analysis, the recent trend of GBP/USD shows a certain rebound strength, but it also faces the risk of adjustment in the short term. In general, the current upward momentum of GBP/USD is mainly due to the weakness of the US dollar, and the inflation data of the UK service industry provides strong fundamental support for the pound. From a technical point of view, GBP/USD has broken through the previous highs. If it can break through the technical resistance of 1.2678 in the short term, the exchange rate is expected to continue to rise.

AUD/USD currently shows some upside potential, having hit this year's high of 0.6409 last week, and technical support may see further gains in the short term. Focus on the key technical levels of 0.6400 and 0.6420, which will determine whether prices can move further up. If these technical levels are broken, AUD/USD may rise further; if they fail to break, a pullback may occur. Market sentiment may remain cautious given the monetary policy expectations of the Reserve Bank of Australia.

The gold market experienced significant volatility last week, with gold prices hitting an all-time high of $2,955 per ounce at one point. It is worth noting that in order to fully recover to near the all-time high, gold needs sufficient catalysts, especially strong stimulus from macroeconomic or geopolitical aspects. Overall, the trend of gold will continue to be driven by macroeconomic and political factors in the near term, and investors need to pay close attention to the latest developments of the Trump administration on Russia sanctions, which may become an important driver of short-term fluctuations in gold prices.

Given the neutral technical indicators and the market waiting for a decisive catalyst, crude oil prices may continue to fluctuate in a narrow range in the short term. However, market sentiment is slightly optimistic due to supply risks in Russia and potential demand growth in major economies. From a technical perspective, if the price breaks through the 50-day moving average of $72.55, it may trigger more buying interest, while if it falls to $70.00, it may attract new support, thus maintaining a balanced but cautiously optimistic market outlook.

Overview of important overseas economic events and matters this week (Sydney Time):

Monday (February 26): Germany's February IFO business climate index, the final value of the eurozone's January CPI annual rate, the US February Dallas Fed business activity index, The Bank of England organized a conference on the theme of "The Future of the Central Bank's Balance Sheet"

Tuesday (February 27): Germany's fourth quarter unadjusted GDP annual rate final value, US December FHFA house price index monthly rate, US December S&P/CS 20-city unadjusted house price index annual rate, US February Conference Board Consumer Confidence Index, US February Richmond Fed Manufacturing Index

Wednesday (February 28): Fed Governor Barr delivered a speech, Richmond Fed Chairman Barkin delivered a speech on inflation, Australia's January weighted CPI annual rate, US January new home sales annualized, US EIA crude oil inventory, G20 finance ministers and central bank governors meeting held

Thursday (February 29): Atlanta Fed President Bostic delivered a speech on economic outlook and housing market, Germany's seasonally adjusted unemployment number in February, the European Central Bank released the minutes of the January monetary policy meeting, the number of initial jobless claims in the United States as of February 24, the revised annualized quarterly rate of real GDP in the fourth quarter of the United States, the monthly rate of durable goods orders in January in the United States, and the monthly rate of existing home sales contract in January in the United States

Friday (March 1): Philadelphia Fed President Harker delivered a speech on economic outlook, the annual rate of the core PCE price index in January in the United States, and the Chicago PMI in February in the United States

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