## A Sterling Week for the Dollar: Highs Amidst Uncertainty
The dollar index [DXY](https://www.tradingview.com/symbols/ICEUS-DXY/) rose by +0.35% on Friday, marking a notable 2-week high. This gain was fuelled by unexpected global tensions and economic uncertainties.
### Trade Tensions Boost the Dollar
The climb in the dollar was not without reason. Last Thursday, President Trump announced impending tariffs, stirring the waters of international trade. As of March 4, Canada and Mexico will face a 25% tariff, with China also seeing an additional 10% tariff. These announcements led investors to flock to safer assets, thereby boosting the dollar’s value. Unfortunately, the situation took an interesting turn after discussions between Trump and Ukraine’s President Zelenskiy were abruptly halted, exacerbating uncertainties surrounding the Ukraine-Russian conflict.
### Economic Indicators: A Mixed Bag
Amidst these political undercurrents, the US economy showed rather mixed signals. Personal spending in January fell by -0.2% month-on-month, a surprising drop against the anticipated +0.2% increase. Contrarily, personal income managed a +0.9% rise month-on-month, marking the most significant bump in a year. When looking at the core PCE price index, it increased by +0.3% month-on-month and +2.6% year-on-year. This aligns with expectations, further complicating the Fed’s policy landscape.
### Precious Metals Weighed Down
Precious metals found no solace in these turbulent times. On Friday, both gold and silver saw significant declines. April gold ([GCJ25](https://www.barchart.com/futures/quotes/GC*0/overview)) fell to a 3-week low, dropping -47.40 (-1.64%). March silver ([SIH25](https://www.barchart.com/futures/quotes/SI*0/overview)) shared a similar fate, closing down -0.582 (-1.83%). The dollar’s rally, coupled with eased inflation expectations in the Eurozone, weakened the demand for these metals as inflation hedges.
| Precious Metals Price Drop | Percentage Change |
|—————————|————————|
| Gold | -1.64% – 3-week low |
| Silver | -1.83% – 1-month low |
### Yen’s Tale of Woe
The Japanese yen also found itself on the back foot, touching a 1-week low against the dollar. Negative economic data from Japan played its part. February’s Tokyo CPI rose less than expected, as did retail sales. Coupled with declining industrial production, these factors paint a dovish picture for the Bank of Japan’s policies. However, stock market jitters did lend the yen some safe-haven appeal.
### US Market Dynamics
In the US, the February MNI Chicago PMI posted an unexpected increase, reaching a 5-month high of 45.5. Meanwhile, the market remains uncertain about the Fed’s next move, with a mere 7% probability of a -25 bp rate cut at the upcoming FOMC meeting on March 18-19.
### Concluding Thoughts
Given the global economic and political climate, uncertainty remains a significant driver for financial markets. Investors should keenly watch upcoming trade developments and central bank actions that could sway the dollar and global financial landscape. For those looking to stay informed, subscribing to the [Barchart Brief](https://www.barchart.com/my/barchart-newsletters/barchart-brief) might prove beneficial.
### Further Insights from Barchart
– Are the Frictions Between the U.S. and Mexico Bullish for Silver?
– Politicians Are Buying This 1 Gold ETF Hand Over Fist as Prices Hit Record Highs.
– The Baltic Dry Freight Index Is Near a 2-Year Low. Why It’s a Bearish Omen for Commodities.
– 2 Gold Stocks to Buy Now to Take Advantage of Rising Prices.
*For further details, feel free to explore Barchart’s [disclosure policy](https://www.barchart/disclosure) and updates.*
*Note: The author, Rich Asplund, did not hold positions in any of the securities mentioned at the time of writing.*
