Research
Elite Research | 15.03.2025

Elite Research | 15.03.2025

Currencies
AUD
Australian Dollar (AUD) Outlook

Central Bank Policy (RBA)

  • The Reserve Bank of Australia (RBA) remains cautious in its approach to monetary easing. While other central banks are moving towards rate cuts, the RBA is expected to hold off longer than most due to still-tight labor market conditions and stubborn inflation.
  • The RBA is forecasting an average unemployment rate of 4.2% in H1 2025, which will be a key benchmark for monetary policy decisions.
  • The central bank is expected to maintain its current stance, with its Chief Economist and Assistant Governor reiterating a "reluctant rate cutter" position in an upcoming speech.

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Economic Growth

  • Employment conditions are slowing from the strong growth observed in the past two months, but not enough to trigger an immediate increase in unemployment.
  • The labor market remains resilient, but weakening job advertisements and employment intentions suggest a potential deceleration in hiring.
  • China's economic data, particularly cyclical indicators around the Lunar New Year period, will be important for the AUD, as China remains a key trading partner.

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Market Sentiment

  • The AUD remains highly correlated with risk sentiment and is currently range-bound due to uncertainty surrounding global trade policies.
  • US retail sales data is expected to be a key driver for risk appetite, which will influence AUD performance.
  • US fiscal and trade policies under President Trump are adding to uncertainty, with tariff discussions playing a major role in shaping market sentiment.

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Geopolitics & Trade

  • Trade tensions between the US and China remain a significant risk factor for the AUD. If Trump announces fresh tariffs on trading partners, it could weigh on risk sentiment and hurt the AUD.
  • The US administration’s policies, including potential tariffs on Australian exports, remain an ongoing concern.

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Short-to-Medium-Term Outlook

  • Short-term: The AUD is expected to remain in a tight range, supported by relative rates and domestic economic resilience but weighed down by global risk sentiment.
  • Medium-term: As the Federal Reserve potentially cuts rates later in 2025, the AUD could find some upside, particularly if RBA remains more hawkish than the market expects.
  • Long-term: The RBA's reluctance to cut rates aggressively may provide a relative yield advantage, supporting the AUD against lower-yielding currencies.

Overall, while the AUD remains vulnerable to global risk sentiment, its fundamental outlook is more stable compared to other G10 currencies due to the RBA’s cautious stance and resilient domestic growth.

CAD
Canadian Dollar (CAD) Outlook

Central Bank Policy (BoC)

  • The Bank of Canada (BoC) recently cut rates to 2.75% but refrained from giving forward guidance due to heightened economic uncertainty.
  • Inflationary risks remain a concern, and the central bank is expected to be cautious with further rate cuts, potentially limiting policy easing to one more cut in 2025.
  • Despite the rate cut, the CAD was largely unaffected, as markets had already priced in the decision.

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Economic Growth

  • The Canadian economy is facing increasing headwinds, particularly due to the ongoing trade tensions with the US.
  • Domestic growth remains weak, and while inflation remains contained, tariffs on Canadian exports have created additional uncertainty.
  • Retail sales data for February is due soon, but markets expect it to show a slowdown due to rising consumer caution amid trade uncertainty.

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Market Sentiment

  • The US-Canada trade war has escalated, with both countries imposing retaliatory tariffs, increasing risk premiums for the CAD.
  • The USD/CAD pair continues to hover around 1.44, reflecting uncertainty about whether the US or Canadian economy will be hit harder by trade tensions.
  • Market volatility remains relatively contained, as options markets suggest a more moderate view on the long-term impact of trade conflicts.

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Geopolitics & Trade

  • The US administration has imposed new tariffs on Canadian steel and aluminum, prompting Canada to retaliate with counter-levies on $30 billion of US goods.
  • Ontario briefly proposed a 25% price surcharge on electricity exports to the US, but this measure was quickly rescinded after a backlash.
  • A further US tariff review is expected in early April, which could introduce additional volatility for the CAD.

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Short-to-Medium-Term Outlook

  • Short-term: The BoC's recent rate cut has not significantly weakened the CAD, but further cuts remain a risk factor.
  • Medium-term: The USD/CAD pair is likely to trade above 1.45 in Q2 2025, reflecting continued US economic resilience and trade-related uncertainty.
  • Long-term: As trade tensions stabilize and the BoC pauses further rate cuts, the CAD may gradually recover, with USD/CAD potentially declining toward 1.40 in the second half of 2025.

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Conclusion

The Canadian dollar remains vulnerable to trade tensions with the US, and while the BoC has adopted a more dovish stance, inflation risks could limit further cuts. The outlook remains cautious, with short-term pressures likely keeping USD/CAD elevated before potential stabilization later in the year.

CHF
Swiss Franc (CHF) Outlook

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Central Bank Policy (SNB)

  • The Swiss National Bank (SNB) is expected to cut rates to 0.25% this month, in response to cooling inflation.
  • Market expectations suggest this will be the final cut in the SNB’s easing cycle, as inflation is now close to zero.
  • The SNB has remained relatively neutral in global trade tensions, but Switzerland was recently blacklisted by the US for unfair trade practices, which could introduce some policy uncertainty.

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Economic Growth

  • Switzerland’s economic growth remains stable but slow, with GDP forecasts for 2025 at 1.3%.
  • Fiscal spending in Germany and broader Eurozone stimulus efforts may have indirect benefits for the Swiss economy, particularly through trade and investment linkages.
  • The Eurozone’s economic re-rating means the SNB has less need to further ease policy aggressively, potentially supporting CHF stability.

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Market Sentiment

  • The CHF continues to function as a safe-haven currency, but its reaction to global risk sentiment has been more muted recently.
  • The EUR/CHF pair has climbed to an eight-month high, suggesting CHF is losing some of its recent strength against the Euro.
  • USD/CHF has dropped to three-month lows, as the market digests weaker US economic data and falling US yields.

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Geopolitics & Trade

  • The Swiss government has stayed neutral in the ongoing global trade conflicts, including US tariffs on European and Asian economies.
  • Switzerland’s trade balance remains positive, though export growth could slow if global demand weakens further.

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Short-to-Medium-Term Outlook

  • Short-term: The CHF is expected to remain on the backburner, as long as global risk sentiment does not deteriorate further.
  • Medium-term: With the SNB likely to finish its rate-cutting cycle, the CHF could gradually become more attractive as a funding currency.
  • Long-term: The EUR/CHF pair may continue to drift higher if Eurozone growth improves further and fiscal stimulus remains strong.

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Conclusion

The Swiss Franc’s appeal as a safe-haven currency remains intact, but further SNB easing and improving Eurozone economic conditions may limit its upside. The CHF could increasingly be used as a funding currency, especially if global uncertainties subside. However, should global risk aversion return, CHF could quickly regain strength.

EUR
Euro (EUR) Outlook

‍Central Bank Policy (ECB)

  • The European Central Bank (ECB) is expected to keep rates elevated at 2.25%, with markets now pricing in a terminal rate above current expectations.
  • Fiscal spending in Germany and other Eurozone nations is expected to alter the ECB’s easing trajectory, delaying potential cuts as inflation risks remain present.
  • The ECB’s approach contrasts with the Federal Reserve’s more aggressive rate-cutting stance, which could help the EUR strengthen against the USD.

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Economic Growth

  • Germany has announced a EUR 500 billion fiscal stimulus, aimed at infrastructure development and defense spending. This is expected to boost Eurozone GDP growth over the next 12 months.
  • The broader Eurozone economy is expected to expand by 1.0% in 2025, with positive spillover effects from Germany's fiscal plans.
  • Despite these fiscal efforts, higher government borrowing could impact credit outlooks for some EU nations, particularly if growth fails to materialize as expected.

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Market Sentiment

  • The EUR has rallied on the back of stronger European growth expectations, but concerns remain over potential headwinds.
  • The unwinding of EUR short positions in FX markets and portfolio rebalancing in global equities have supported the currency.
  • US tariffs on European goods, set to be introduced in April, could weigh on sentiment and put downward pressure on the EUR.

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Geopolitics & Trade

  • A potential trade war with the US remains a key risk, particularly as the Biden administration looks to address trade imbalances with the Eurozone.
  • A ceasefire in Ukraine could provide additional tailwinds for the EUR by boosting European market confidence and lowering energy costs.
  • Rising government debt levels in Europe could limit fiscal maneuverability, which may impact investor sentiment toward the currency.

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Short-to-Medium-Term Outlook

  • Short-term: The EUR/USD pair is expected to trade within the 1.05-1.10 range, with near-term risks skewed to the downside due to trade uncertainties.
  • Medium-term: The EUR is likely to appreciate, especially if fiscal stimulus is implemented effectively and the ECB remains relatively more hawkish than the Fed.
  • Long-term: As the Eurozone economy stabilizes and trade risks subside, the EUR/USD pair could gradually move toward 1.12-1.15 in 2026.

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Conclusion

The EUR is benefiting from improved growth expectations and fiscal stimulus in Germany, but trade risks with the US and uncertainty around ECB rate cuts could limit upside potential. The EUR/USD outlook remains positive over the medium term, particularly as the Fed moves toward rate cuts while the ECB stays cautious.

GBP
British Pound (GBP) Outlook

Central Bank Policy (BoE)

  • The Bank of England (BoE) is expected to continue its quarterly rate-cutting cycle, with a May rate cut currently priced in at 17bps and an August cut at 38bps.
  • While markets anticipate some easing, inflation remains a challenge, with expectations of a temporary rise towards 4.0% during the summer, which could limit further aggressive rate cuts.
  • UK bond yields remain higher than in other major economies, supporting the GBP by maintaining a relatively attractive yield profile.
  • The BoE’s March meeting is expected to reaffirm a gradual rate-cutting path, balancing between inflation concerns and the need to support growth.

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Economic Growth

  • UK economic data has shown signs of improvement, despite a weaker-than-expected January GDP report.
  • Growth momentum appears to be strengthening, but concerns over government debt levels and potential austerity measures are weighing on the outlook.
  • The 26 March UK Spring Statement is a key risk event, as it may reveal further spending cuts aimed at meeting fiscal rules, which could impact market confidence and weigh on the GBP.

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Market Sentiment

  • The GBP has benefited from a re-rating of European currencies, lifting GBP/USD toward the 1.30 level for the first time since last year’s US election.
  • However, the GBP has weakened modestly against the EUR, with EUR/GBP rising above 0.84 as expectations for ECB rate cuts have been pushed back.
  • The UK's decision not to retaliate against US tariffs has been praised by the Trump administration, reducing the risk of trade-related volatility for the currency.

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Geopolitics & Trade

  • Unlike the EU, the UK has avoided direct trade retaliation against the US, improving its trade positioning and reducing tariff-related risks.
  • The US-UK trade relationship remains stable, which provides some support to GBP compared to other European currencies facing increased trade friction with the US.
  • Despite this, the UK economy remains vulnerable to broader geopolitical uncertainties, including global market volatility and risk sentiment shifts.

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Short-to-Medium-Term Outlook

  • Short-term: The GBP is expected to remain supported as long as the BoE follows its measured rate-cutting path, with GBP/USD likely trading in the 1.25–1.30 range.
  • Medium-term: If UK economic momentum continues improving, the GBP could maintain strength, especially if BoE rate cuts remain gradual.
  • Long-term: The GBP’s performance will depend on broader global market stability, with potential downside risks if financial instability or trade disruptions emerge.

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Conclusion

The GBP remains relatively stable, supported by a gradual BoE easing cycle, strong yields, and a resilient economy. However, fiscal tightening and trade uncertainties pose risks, making the 26 March Spring Statement a key event to watch for potential market reactions.

JPY
Japanese Yen (JPY) Outlook

Central Bank Policy (BoJ)

  • The Bank of Japan (BoJ) is expected to hold rates steady at 0.50%, with the next hike likely in July or possibly as early as June.
  • The BoJ has indicated that rate hikes will continue if economic conditions evolve as expected, particularly if wage growth remains strong.
  • The latest Shunto wage negotiations resulted in a 5.46% increase, exceeding market expectations and reinforcing the likelihood of further BoJ tightening.
  • The 10-year JGB yield has risen above 1.50%, reflecting the market’s expectations for a more hawkish BoJ stance.

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Economic Growth

  • The Japanese economy continues to show moderate growth, with strong capital expenditure and export activity providing support.
  • Household consumption remains under pressure, but recent wage gains could improve domestic demand in the coming months.
  • The government is not planning any immediate large-scale fiscal stimulus, focusing instead on structural reforms.

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Market Sentiment

  • The JPY remains highly correlated with risk aversion, benefiting from safe-haven inflows when market uncertainty rises.
  • The US-Japan yield spread has narrowed by nearly 100bps in a 40-day period, one of the sharpest declines since the Global Financial Crisis.
  • A strong reversal in speculative positioning has been observed, with leveraged funds shifting from record short positions in JPY to net long positions for the first time since last October.

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Geopolitics & Trade

  • The BoJ is closely monitoring US trade policy, particularly potential tariffs on Japanese exports, which could influence monetary policy decisions.
  • Foreign bond buying by Japanese investors has surged, with the largest monthly purchase of overseas bonds since last August, reflecting confidence in global fixed income.

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Short-to-Medium-Term Outlook

  • Short-term: The USD/JPY pair is expected to trade between 145-150, with potential for further JPY strength if US yields continue to decline.
  • Medium-term: If the BoJ remains committed to rate hikes, the JPY should appreciate, particularly as rate differentials with the US compress.
  • Long-term: The JPY's safe-haven appeal remains intact, and further BoJ tightening could support a stronger yen in 2025, especially if global risk sentiment deteriorates.

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Conclusion

The JPY is gradually regaining strength as market expectations for BoJ tightening grow and US-Japan yield spreads narrow. The currency remains highly sensitive to risk sentiment, meaning global equity market movements and US trade policy will be key drivers in the months ahead.

NZD
New Zealand Dollar (NZD) Outlook

Central Bank Policy (RBNZ)

  • The Reserve Bank of New Zealand (RBNZ) is expected to cut rates by 25bps on 9 April, with markets pricing in a total of 75bps of easing this year.
  • However, inflation concerns remain, and policymakers may adopt a slower rate-cutting approach than the market expects.
  • The RBNZ is forecast to reach a terminal rate of 3.0%, but further rate cuts beyond May are less certain, as upcoming CPI and employment data will shape the policy outlook.

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Economic Growth

  • The New Zealand economy is recovering from a mild recession, with 4Q GDP expected at 0.4% QoQ after two consecutive quarters of contraction.
  • Dry weather conditions and weak agricultural output have weighed on economic growth, though La Niña conditions could bring relief in the second half of 2025.
  • A stable NZ-US interest rate differential is expected, as the RBNZ is set to match the Federal Reserve’s rate cuts, preventing a major divergence in monetary policy.

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Market Sentiment

  • NZD remains highly sensitive to risk sentiment, with trade policy and global demand driving short-term moves.
  • Trump’s China tariffs could impact New Zealand’s exports, but expected tariff reductions could provide medium-term relief.
  • The NZD/USD pair is projected to remain in the 0.56–0.58 range over the next six months, with a potential upside toward 0.60 by early 2026.

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Geopolitics & Trade

  • US-China trade policies will directly affect NZD performance, given New Zealand’s reliance on Chinese demand for dairy and agricultural exports.
  • China’s economic slowdown has weighed on commodity-linked currencies like the NZD, but a recovery in Chinese demand could provide upside in late 2025.

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Short-to-Medium-Term Outlook

  • Short-term: The NZD is likely to trade in a tight range around 0.56, reflecting RBNZ’s upcoming rate cut and US economic uncertainty.
  • Medium-term: As global economic conditions improve and inflation stabilizes, the NZD could gradually strengthen, particularly if China’s demand rebounds.
  • Long-term: The RBNZ’s rate path will be a key driver, with further cuts potentially capping NZD gains in 2026.

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Conclusion

The NZD remains in a cautious position, with monetary easing and trade risks capping upside potential. However, a recovery in global demand and a stable NZ-US rate differential could limit downside risks, making the NZD a more attractive carry trade currency as global rates decline.

USD
US Dollar (USD) Outlook

Central Bank Policy (Federal Reserve)

  • The Federal Reserve is expected to hold rates steady at 4.50% at its next meeting, with markets pricing in two rate cuts in the second half of 2025.
  • Fed Chair Jerome Powell has stated there is no urgency to cut rates further, citing solid growth and labor market conditions.
  • Quantitative tightening remains a focus, as the Fed is expected to manage its reserves carefully, potentially slowing the pace of balance sheet reductions later this year.

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Economic Growth

  • The US economy has faced setbacks due to government spending cuts and trade protectionist policies, which have led to weaker sentiment and consumer spending.
  • Tariff escalation has increased cost pressures, with concerns that rising input prices may squeeze corporate margins and dampen growth further.
  • Despite these headwinds, Treasury Secretary Scott Bessent has reiterated that the weaker dollar is part of a "natural adjustment" following last year’s rally.

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Market Sentiment

  • US equity markets have seen increased volatility, reflecting concerns over trade policy, fiscal spending, and the Fed’s monetary stance.
  • The USD has weakened against most G10 currencies as portfolio reallocation favors European and Asian assets.
  • A potential US government shutdown was recently averted, helping stabilize market confidence, though further political uncertainty could weigh on the USD in the coming months.

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Geopolitics & Trade

  • President Trump’s administration has intensified trade conflicts, particularly with new tariffs on EU and Canadian imports.
  • China’s policy adjustments to boost domestic consumption could influence global demand, impacting USD flows in emerging markets.
  • The US trade war risks escalating further in April, when additional retaliatory tariffs from major trading partners are expected.

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Short-to-Medium-Term Outlook

  • Short-term: The USD is expected to consolidate at current weaker levels, supported by stable US Treasury yields and cautious Fed policy.
  • Medium-term: US rate cuts in H2 2025 could drive further USD weakness, especially if the Fed signals more easing into 2026.
  • Long-term: The USD remains vulnerable to global trade shifts and fiscal policy developments, with a potential return of the "Weak Dollar Doctrine" weighing on sentiment.

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Conclusion

The USD’s outlook is increasingly uncertain, with Fed policy divergence, trade risks, and fiscal tightening shaping its trajectory. While short-term stabilization is expected, the medium-to-long-term trend suggests further weakness, particularly if the Fed leans more dovish and trade tensions escalate further.

Emerging & Exotic Markets
Emerging and Exotic Markets Outlook

Latin America

  • Brazil (BRL): The Brazilian real (BRL) remains under pressure, with USD/BRL expected to stay in the 5.80–6.00 range due to trade uncertainties and capital outflows. The central bank is expected to cut rates further, keeping BRL as one of the weaker EM currencies.
  • Mexico (MXN): The Mexican peso has shown resilience, but USD/MXN is projected to move toward 22.50 in the second half of 2025. Higher US interest rates and trade frictions could weaken demand for MXN.
  • Chile (CLP): The Chilean peso remains volatile, with USD/CLP forecast to trade around 930–950 in the coming months. Copper prices will remain a key driver, given Chile’s heavy reliance on commodity exports.
  • Colombia (COP): The Colombian peso is under pressure, with USD/COP expected to rise toward 4300–4400 as trade and fiscal uncertainties persist.

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Asia

  • China (CNY): The Chinese yuan (CNY) is expected to weaken further, with USD/CNY trading above 7.40 as capital outflows and weak domestic demand continue to weigh on the currency.
  • India (INR): The Indian rupee (INR) remains stable, but USD/INR is forecast to move toward 89.00 by late 2025 due to a widening trade deficit and high oil prices.
  • Indonesia (IDR): The Indonesian rupiah (IDR) is under moderate depreciation pressure, with USD/IDR expected to hover around 16,300–16,500 due to external trade imbalances.
  • South Korea (KRW): The South Korean won (KRW) remains weak, with USD/KRW trading at 1,450–1,460, reflecting global risk sentiment and potential capital outflows.

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Africa

  • South Africa (ZAR): The South African rand (ZAR) remains one of the most volatile emerging market currencies, with USD/ZAR expected to range between 17.40 and 18.30. Political uncertainty and commodity price swings will be key drivers.

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Emerging Europe

  • Poland (PLN): The Polish zloty (PLN) has weakened, with USD/PLN expected to trade around 3.98–4.04, as economic growth slows and interest rate differentials with the US weigh on the currency.
  • Turkey (TRY): The Turkish lira (TRY) continues to depreciate, with USD/TRY forecast to reach 41.50 by early 2026 due to high inflation and central bank credibility concerns.
  • Russia (RUB): The Russian ruble (RUB) remains weak, with USD/RUB trading at 96.00 as sanctions and capital flight continue to impact the currency.

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Conclusion

Emerging market currencies remain vulnerable to global monetary policy shifts, trade risks, and capital flows. Latin American currencies face pressures from weak commodity prices, Asian FX is adjusting to China’s slowdown, while emerging Europe remains fragile due to geopolitical risks and inflation concerns. The US dollar’s trajectory remains the biggest driver for EMFX performance, with potential rate cuts in H2 2025 influencing risk appetite.

Commodities
Oil
Oil Market Outlook

OPEC Policy & Supply Dynamics

  • OPEC+ has maintained production cuts, with output capped at 40.5 million barrels per day (mbpd) for the first half of 2025.
  • Saudi Arabia and Russia have extended their voluntary production cuts through Q2, keeping Brent prices supported.
  • OPEC’s latest forecast indicates a supply deficit by mid-2025, as demand picks up while supply remains constrained.

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Global Demand & Economic Growth

  • China's demand is recovering, with refinery runs increasing amid strong gasoline and diesel consumption.
  • US economic growth concerns persist, but domestic refinery utilization rates remain high, supporting crude demand.
  • The IEA revised its global oil demand growth forecast up by 200,000 barrels per day (bpd) for 2025, citing improving macro conditions.

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Geopolitical Risks

  • Middle East tensions continue to pose upside risks, particularly around the Strait of Hormuz.
  • US-Iran relations remain tense, raising concerns about potential disruptions to Persian Gulf exports.
  • The Russia-Ukraine war remains a wildcard, with further sanctions on Russian oil possibly tightening global supply.

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Market Sentiment & Price Forecast

  • Brent crude is expected to trade between $88–$94 per barrel through Q2 2025.
  • WTI crude is projected to stay in the $83–$90 per barrel range, supported by supply constraints and steady demand.
  • Hedge funds have increased their long positions in oil futures, suggesting expectations for higher prices.

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Short-to-Medium-Term Outlook

  • Short-term: Oil prices should remain supported by OPEC+ cuts and demand resilience in China and India.
  • Medium-term: Potential Fed rate cuts could weaken the USD, making oil more attractive for foreign buyers and supporting prices.
  • Long-term: Structural underinvestment in oil production could drive persistent supply tightness, keeping prices elevated into 2026.

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Conclusion

Oil markets are well-supported by OPEC+ supply management, resilient demand, and geopolitical risks. While macro uncertainties remain, the short-to-medium-term outlook favors higher prices, particularly as monetary easing in major economies could support global demand.

Gas
Natural Gas Market Outlook

Supply & Production

  • US natural gas production remains at record levels, with daily output averaging 101 Bcf in Q1 2025.
  • LNG exports continue to rise, particularly to Europe and Asia, as demand for non-Russian gas remains strong.
  • Qatar and Australia have expanded LNG output, which could put pressure on US LNG market share in Asia.

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Global Demand & Economic Growth

  • European storage levels remain high, following a mild winter, reducing immediate demand pressure.
  • China’s industrial demand for LNG has picked up, particularly in the manufacturing sector.
  • The IEA projects global gas demand growth at 2.1% in 2025, supported by economic recovery in emerging markets.

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Geopolitical Risks

  • Ongoing tensions between Russia and Ukraine have led to continued disruptions in Russian gas supplies, prompting higher reliance on US and Qatari LNG.
  • US-China trade relations remain a risk, as potential tariffs on energy exports could impact LNG demand from China.
  • Middle East instability could disrupt LNG shipping routes, particularly if tensions escalate in the Persian Gulf.

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Market Sentiment & Price Forecast

  • US Henry Hub prices are expected to range between $2.50–$3.20/MMBtu in Q2 2025, reflecting high supply and moderate demand.
  • European TTF gas prices are forecast to trade around €28–€32/MWh, supported by steady LNG imports and stable storage levels.
  • Asian LNG spot prices are projected to hover between $12–$14/MMBtu, depending on Chinese demand recovery.

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Short-to-Medium-Term Outlook

  • Short-term: Mild weather and high storage levels are keeping prices in check, with limited upside in the near term.
  • Medium-term: Potential US rate cuts could weaken the USD, making LNG imports cheaper for Asian and European buyers, supporting demand.
  • Long-term: Structural demand growth in Asia and declining domestic production in Europe could keep LNG prices supported, particularly as nuclear and coal phase-outs increase reliance on gas.

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Conclusion

Natural gas markets remain well-supplied, with strong US LNG exports and robust production levels keeping prices contained. However, geopolitical risks and shifting demand dynamics in China and Europe could drive volatility, making global trade flows and policy decisions key factors to watch in 2025.

Gold
Gold Market Outlook

Market Drivers

  • Gold has surged past $3,000/oz for the first time, driven by safe-haven demand amid escalating trade tensions and rising geopolitical risks.
  • US President Donald Trump's latest tariff threats, including a 200% tariff on European wine and 25% tariffs on steel and aluminum, have fueled inflation concerns and boosted gold's appeal as a hedge against economic uncertainty.
  • Central bank gold purchases have remained strong, with over 1,045 tonnes acquired last year, accounting for approximately 20% of total gold demand. More buying from central banks is expected, further supporting prices.

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Monetary Policy & Inflation Impact

  • The Federal Reserve remains cautious on rate cuts, with only two reductions expected in 2025, which could keep real yields supportive of gold prices.
  • Persistently high inflation, particularly due to rising commodity costs from trade restrictions, is another factor keeping investors in gold.
  • The weakening US dollar amid global trade frictions has further added to gold's attractiveness, as investors seek alternative stores of value.

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Geopolitical Risks

  • US-China tensions and potential new tariffs on Asian goods could sustain gold demand as a geopolitical hedge.
  • Russia-Ukraine war concerns continue to drive gold purchases, particularly in Europe and emerging markets.
  • Middle East instability remains a wildcard, with any further escalation likely to push gold prices higher.

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Market Sentiment & Price Forecast

  • ETF holdings in gold have grown by 3.5 million ounces (moz) year-to-date, reflecting strong investor appetite for gold exposure.
  • Gold prices are projected to remain in the $2,900–$3,200 range for Q2 2025, with potential upside if global trade and economic risks persist.

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Short-to-Medium-Term Outlook

  • Short-term: Gold is expected to consolidate near current highs, supported by inflation concerns and geopolitical tensions.
  • Medium-term: Further central bank purchases and the potential for Fed rate cuts could sustain gold’s bullish momentum into H2 2025.
  • Long-term: The combination of macroeconomic uncertainty, trade disruptions, and safe-haven demand suggests that gold may remain elevated above $3,000 into 2026.

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Conclusion

Gold remains one of the best-performing commodities of 2025, benefiting from strong central bank demand, heightened geopolitical uncertainty, and inflation risks. While short-term volatility is possible, the medium-to-long-term trajectory remains bullish, especially if trade frictions and monetary easing persist.

Silver
Silver Market Outlook

Market Drivers

  • Silver prices have surged alongside gold, benefiting from strong investment demand and industrial use cases.
  • The renewed focus on industrial metals has driven higher demand for silver in technology, solar panels, and EV production.
  • Central bank interest in precious metals remains elevated, with some emerging market banks adding silver to reserves.

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Monetary Policy & Inflation Impact

  • Federal Reserve rate expectations remain key for silver prices, with potential rate cuts in H2 2025 supporting further gains.
  • Silver has outperformed many base metals, as real yields remain low, increasing its appeal as a store of value.
  • Higher inflation expectations and weakening USD trends could sustain investor appetite for silver, particularly among ETF and futures markets.

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Geopolitical Risks

  • Global trade tensions have led to greater uncertainty, prompting safe-haven demand for silver alongside gold.
  • Ongoing supply chain disruptions in key silver-producing nations, including Mexico and Peru, could impact future supply dynamics.
  • China’s industrial policies and US tariffs on technology exports may influence silver’s demand profile over the medium term.

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Market Sentiment & Price Forecast

  • Silver ETF holdings have risen, reflecting growing interest in silver as both an investment and an industrial asset.
  • Silver is expected to trade in the $28–$34/oz range through Q2 2025, supported by robust demand and monetary easing expectations.

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Short-to-Medium-Term Outlook

  • Short-term: Prices should remain supported by strong industrial demand and ETF inflows, keeping silver near $30/oz.
  • Medium-term: As Fed rate cuts materialize and inflation remains persistent, silver could push above $32/oz in H2 2025.
  • Long-term: The structural shift toward green energy and industrial metals suggests silver demand will stay robust, with potential for prices to reach $35–$38/oz in 2026.

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Conclusion

Silver is benefiting from a combination of strong investment demand, industrial growth, and inflation hedging. While short-term volatility remains, the medium-to-long-term outlook remains constructive, particularly as monetary easing and industrial metal demand trends continue to support prices.

Platinum
Platinum Market Outlook

Market Drivers

  • Platinum prices have remained stable, trading in a range of $1,000–$1,150 per ounce, supported by industrial demand and tightening supply dynamics.
  • The global shift toward hydrogen fuel cell technology has increased long-term demand prospects for platinum, particularly in automotive and energy applications.
  • ETF holdings in platinum have remained stable, with investor demand lagging behind gold and silver.

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Monetary Policy & Inflation Impact

  • Federal Reserve rate decisions remain a key factor, with potential cuts in H2 2025 providing support for platinum prices.
  • Inflationary concerns and the weaker US dollar have helped maintain investor interest in precious metals, including platinum.
  • Platinum’s industrial use differentiates it from gold and silver, as it benefits from both investment flows and industrial demand growth.

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Geopolitical Risks

  • Platinum supply remains concentrated in South Africa and Russia, both of which face geopolitical and economic challenges.
  • Disruptions in South African mining operations, due to power shortages and labor strikes, have added supply constraints, supporting prices.
  • Russian supply risks remain elevated, as ongoing sanctions could restrict platinum exports to key markets in Europe and North America.

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Market Sentiment & Price Forecast

  • Platinum prices are projected to trade between $1,050–$1,200 per ounce through Q2 2025, supported by steady industrial demand and constrained supply.
  • Demand from the automotive sector is expected to grow, particularly as hybrid and hydrogen fuel cell vehicle production increases.
  • Investment demand remains a wildcard, with further upside possible if inflation concerns intensify or if industrial metal shortages emerge.

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Short-to-Medium-Term Outlook

  • Short-term: Prices should remain range-bound as industrial demand offsets weak investment flows.
  • Medium-term: A weaker USD and potential Fed rate cuts could boost platinum’s appeal, pushing prices toward $1,200.
  • Long-term: The structural shift toward hydrogen energy and supply constraints from major producers suggest that platinum could outperform other precious metals in 2026 and beyond.

‍

Conclusion

Platinum remains a critical industrial metal, with rising demand in hydrogen energy and automotive applications balancing supply risks. While investment demand lags behind gold and silver, the long-term outlook remains bullish, particularly if supply disruptions continue and clean energy policies drive increased usage.

Agriculture
Agricultural Commodities Outlook

Wheat

  • Global wheat production remains strong, but weather disruptions in key exporting regions (such as the US and Australia) have introduced some volatility in supply.
  • US wheat exports have remained subdued, with Russian and Ukrainian exports dominating the global market despite ongoing geopolitical tensions.
  • China's demand for wheat imports is expected to increase, which could support prices in the second half of 2025.
  • Price Forecast: Wheat prices are expected to trade between $6.10–$6.80 per bushel through Q2 2025, with potential upside if weather conditions deteriorate.

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Corn

  • US corn production has remained resilient, but low export demand has kept prices under pressure.
  • Ethanol production continues to support domestic demand, but lower fuel consumption could weigh on the sector.
  • Brazil’s record corn harvest is expected to add further pressure on global prices, especially as the country gains market share.
  • Price Forecast: Corn futures are expected to trade between $4.50–$5.20 per bushel, with any unexpected supply shocks likely to provide support.

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Soybeans

  • Soybean demand remains strong, particularly from China, which continues to rebuild its hog herd.
  • South American production has rebounded, with Argentina’s soy crop recovering from last year’s drought.
  • US-China trade policies remain a wildcard, with any new tariffs or export restrictions potentially impacting demand.
  • Price Forecast: Soybean futures are forecast to trade in the $12.50–$13.80 per bushel range, supported by demand stability but limited upside from supply factors.

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Coffee

  • Brazil's coffee production remains high, but logistics disruptions and port delays have caused some supply constraints.
  • Vietnamese coffee exports have slowed, supporting robusta prices, while arabica prices remain sensitive to weather conditions in Brazil and Colombia.
  • Price Forecast: Arabica coffee is expected to trade between $1.80–$2.20 per pound, while robusta futures are forecast between $2,300–$2,500 per metric ton.

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Sugar

  • Sugar prices have been supported by global supply tightness, as India and Thailand have faced lower-than-expected output.
  • Brazil’s sugar output remains strong, but diversion of cane to ethanol production may limit exports.
  • Price Forecast: Sugar futures are expected to trade between $21–$24 per pound, supported by tight supply and ethanol demand.

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Short-to-Medium-Term Outlook

  • Short-term: Weather patterns and trade developments will be key drivers, particularly for wheat and soybeans.
  • Medium-term: China’s demand recovery and global production trends will determine price action, particularly in corn and coffee markets.
  • Long-term: Structural shifts in ethanol demand, climate conditions, and trade policies will shape agricultural commodity trends through 2026.

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Conclusion

Agricultural markets remain heavily influenced by global trade, weather, and macroeconomic factors. While supply levels are relatively stable, demand from key importers like China and ongoing geopolitical risks could introduce price volatility across the sector.

Equities
S&P500
S&P 500 Market Outlook

Macroeconomic Drivers

  • US growth expectations have weakened, with recent economic data coming in below expectations.
  • Federal Reserve policy remains a key factor, with two rate cuts expected in H2 2025, which could provide some support for equities.
  • Trade tensions and spending cuts under the Trump administration have weighed on corporate sentiment, raising concerns about slower earnings growth.

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Earnings & Corporate Performance

  • Q1 earnings season will be critical, with companies expected to report a mix of strong tech sector profits but weaker industrial and consumer sector results.
  • Profit margins remain under pressure due to higher input costs from tariffs and supply chain disruptions.
  • Tech stocks have been a key driver, but rising bond yields and trade risks could challenge the sector’s momentum.

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Market Sentiment & Risks

  • Investor confidence has been shaken as fears of a potential US recession have increased, with some analysts flagging a sharp slowdown in corporate investment.
  • Equity market volatility has increased, driven by shifting Fed expectations and geopolitical uncertainty.
  • Hedge funds have reduced their exposure to risk assets, reflecting a cautious approach to equities.

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Sector Performance

  • Technology stocks continue to outperform, but valuations remain stretched.
  • Financials have struggled, as concerns over economic growth have dampened banking sector outlooks.
  • Industrials and consumer stocks have faced headwinds, particularly from higher costs and weakening demand.

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Short-to-Medium-Term Outlook

  • Short-term: The S&P 500 is likely to remain volatile, trading within a 4,800–5,200 range, with downside risks if economic data deteriorates.
  • Medium-term: Rate cuts in H2 2025 could provide support, but earnings growth will be key to sustaining equity market strength.
  • Long-term: The market’s ability to absorb trade shocks and adjust to changing Fed policy will determine the longer-term trend.

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Conclusion

The S&P 500 remains in a fragile position, with economic uncertainty, corporate earnings risks, and geopolitical tensions weighing on investor sentiment. While rate cuts later this year could offer some relief, trade policies and slowing consumer demand remain key headwinds.

NASDAQ
NASDAQ Market Outlook

Macroeconomic Drivers

  • US economic growth concerns persist, with weaker-than-expected consumer spending and corporate investment impacting sentiment.
  • The Federal Reserve’s reluctance to cut rates aggressively in early 2025 has weighed on high-growth tech stocks, though rate cuts in H2 2025 could provide support.
  • US-China trade tensions and new tariffs on tech exports remain a major risk factor for the sector.

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Earnings & Corporate Performance

  • The technology sector remains a key driver of US equity performance, but profit margins are under pressure due to higher input costs from tariffs and supply chain disruptions.
  • AI and semiconductor stocks continue to lead the market, with cloud computing and cybersecurity sectors also showing strong earnings growth.
  • Consumer tech companies face weaker demand, particularly in the hardware and streaming sectors, as discretionary spending declines.

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Market Sentiment & Risks

  • NASDAQ’s strong 2024 performance has led to stretched valuations, making the index vulnerable to earnings disappointments.
  • Investor confidence remains fragile, with a shift toward defensive stocks and value sectors amid uncertainty over monetary policy and fiscal policy shifts.
  • Hedge funds have reduced exposure to high-beta tech stocks, reflecting a more cautious approach.

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Sector Performance

  • Semiconductor stocks continue to perform well, driven by AI advancements and global chip demand.
  • Cloud computing and cybersecurity sectors are seeing sustained growth, while streaming and consumer tech stocks face headwinds.
  • EV and green energy stocks have struggled, as government incentives decline and competition intensifies.

‍

Short-to-Medium-Term Outlook

  • Short-term: The NASDAQ is expected to remain volatile, trading within a 16,000–17,500 range, with potential downside if earnings growth slows further.
  • Medium-term: Fed rate cuts in H2 2025 could provide some relief, particularly for high-growth tech stocks.
  • Long-term: Sustained AI-driven innovation and digital transformation trends could support NASDAQ’s long-term growth trajectory, but regulatory risks and trade tensions remain key headwinds.

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Conclusion

The NASDAQ remains highly sensitive to Federal Reserve policy, trade risks, and earnings momentum. While AI and semiconductor stocks continue to drive the index, broader tech valuations remain stretched, making H2 2025 a critical period for potential upside if rate cuts and earnings surprises materialize.

Dow Jones
Dow Jones Market Outlook

Macroeconomic Drivers

  • US economic growth is facing increased downside risks, with spending cuts and trade policies under the Trump administration weighing on corporate sentiment.
  • The Federal Reserve remains cautious about rate cuts, with markets pricing in two reductions in H2 2025, which could support equity valuations.
  • Higher tariffs on imported goods could raise costs for industrial and consumer sectors, impacting profit margins for Dow-listed firms.

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Earnings & Corporate Performance

  • Blue-chip stocks remain resilient, with strong earnings in healthcare, defense, and energy sectors balancing out weakness in industrials and consumer goods.
  • Manufacturing and export-driven firms face challenges, particularly as tariffs on key materials increase input costs.
  • Dividend-paying stocks within the Dow remain attractive, particularly for income-focused investors seeking stability amid market volatility.

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Market Sentiment & Risks

  • Investor sentiment has turned cautious, with capital shifting toward defensive sectors like utilities and healthcare.
  • Trade war concerns and stagflation risks remain a focus, particularly as US CPI data suggests persistent inflationary pressures.
  • Rising credit spreads and corporate debt concerns have added pressure to market risk assessments.

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Sector Performance

  • Energy and defense stocks have outperformed, benefiting from higher oil prices and increased government military spending.
  • Industrials and materials sectors face headwinds, due to higher tariffs and slowing global demand.
  • Financials have struggled, as tightening credit conditions and softer loan growth weigh on bank earnings.

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Short-to-Medium-Term Outlook

  • Short-term: The Dow is expected to remain range-bound, trading between 37,000–39,500, with upside potential if economic data stabilizes.
  • Medium-term: Fed rate cuts in H2 2025 could support valuations, but corporate earnings growth will be a key determinant of sustained gains.
  • Long-term: Structural shifts in trade policy and fiscal spending will shape the trajectory, with potential for renewed volatility if US-China trade relations worsen.

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Conclusion

The Dow Jones remains a mixed bag, with defensive and dividend stocks offering stability, while industrials and financials face growth challenges. While rate cuts later this year could provide some relief, trade tensions and inflation concerns remain key risks that could limit upside potential in 2025.

DAX40
DAX 40 Market Outlook

Macroeconomic Drivers

  • Germany’s €500 billion fiscal package is set to boost economic growth, with a significant portion allocated to infrastructure and climate transition projects.
  • The European Central Bank (ECB) is expected to maintain a cautious approach to rate cuts, with a terminal rate likely above 2.25% due to inflation concerns.
  • US-EU trade tensions are a major downside risk, as President Trump has threatened 200% tariffs on over $10 billion worth of European goods, which could negatively impact German exports.

‍

Earnings & Corporate Performance

  • The DAX has benefited from stronger European growth expectations, with industrial, financial, and consumer sectors showing resilience.
  • Export-oriented companies face challenges from global trade uncertainty, but domestic fiscal stimulus is expected to offset external risks.
  • Automobile and manufacturing sectors remain under pressure, particularly if tariffs escalate further.

‍

Market Sentiment & Risks

  • Investor sentiment toward European equities has improved, driven by a reallocation of global capital into EU assets.
  • The DAX remains sensitive to ECB policy decisions, with the timing of rate cuts impacting corporate valuations.
  • Geopolitical risks, particularly regarding US trade policies, remain a key uncertainty for German equities.

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Sector Performance

  • Industrial and infrastructure companies are positioned to benefit from increased government spending.
  • Financials remain stable, as higher bond yields and fiscal support improve their outlook.
  • Automotive and export-heavy sectors face headwinds from trade restrictions, though some relief could come from supply chain improvements.

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Short-to-Medium-Term Outlook

  • Short-term: The DAX is expected to trade within the 16,500–17,500 range, with upside potential if fiscal stimulus measures are implemented smoothly.
  • Medium-term: ECB rate decisions and global trade dynamics will determine the index’s trajectory, with potential for further gains if growth remains robust.
  • Long-term: Structural reforms and infrastructure investments could support a sustained recovery in Germany’s economy and stock market.

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Conclusion

The DAX 40 remains well-supported by fiscal stimulus and improving Eurozone growth expectations, but trade tensions and ECB policy decisions remain critical factors. While short-term volatility is likely, the medium-term outlook remains constructive, particularly if Germany’s fiscal expansion leads to a stronger economic rebound.

FTSE100
FTSE 100 Market Outlook

Macroeconomic Drivers

  • The UK economy is showing signs of improvement, though growth remains modest compared to global peers.
  • The Bank of England (BoE) is expected to cut rates gradually, with a 17bps cut priced in for May and a 38bps cut in August. However, the BoE is not expected to be as aggressive as the ECB, which supports UK equities.
  • UK inflation remains sticky, and services inflation is slowing at a frustratingly slow pace. A temporary rise to 4.0% during the summer could limit the BoE’s ability to cut rates aggressively.

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Earnings & Corporate Performance

  • Large-cap UK equities continue to attract investors, particularly as FTSE 100 companies derive a significant portion of their revenue from overseas markets.
  • Energy and commodity stocks remain key drivers, benefiting from higher oil and metal prices.
  • Financial stocks are steady, supported by higher bond yields and stable lending conditions.

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Market Sentiment & Risks

  • The FTSE 100 has outperformed European indices, largely due to its composition of defensive sectors and multinational exposure.
  • Political risks remain a factor, with the UK preparing for its Spring Budget announcement on 26 March, which could introduce potential spending cuts or fiscal tightening.
  • Global trade tensions and US tariffs remain a concern, though the UK has avoided retaliatory measures, which has been viewed positively by markets.

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Sector Performance

  • Energy stocks continue to perform well, with Brent crude trading above $90 per barrel.
  • Consumer stocks have seen mixed performance, as UK consumer sentiment remains cautious.
  • Technology stocks have lagged, given the index’s lower exposure to high-growth tech compared to the NASDAQ or S&P 500.

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Short-to-Medium-Term Outlook

  • Short-term: The FTSE 100 is expected to remain stable, trading between 7,700 and 8,100, supported by commodity strength and defensive sector performance.
  • Medium-term: Potential BoE rate cuts and improving fiscal policy clarity could drive further gains, particularly if global risk sentiment remains stable.
  • Long-term: Continued stability in UK macro conditions and resilient corporate earnings should keep the FTSE 100 well-positioned, especially relative to more volatile equity markets in the US and Europe.

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Conclusion

The FTSE 100 remains a strong performer, benefiting from its defensive composition, multinational exposure, and resilient earnings. BoE policy and fiscal decisions will be key drivers, while trade risks and global market sentiment could introduce some volatility in the months ahead.

JPN225
Nikkei 225 (JPN225) Market Outlook

Macroeconomic Drivers

  • Japan’s economy continues its gradual recovery, supported by rising wages and strong capital investment.
  • The Bank of Japan (BoJ) is expected to maintain its hawkish bias, with a possible rate hike in July 2025, after strong Shunto wage negotiations showed wage growth at its highest level since 1991.
  • The BoJ is closely monitoring global rate differentials, particularly as the Federal Reserve considers rate cuts later in the year, which could support Japanese equities by reducing yield pressure.

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Earnings & Corporate Performance

  • Large-cap technology and industrial stocks have driven Nikkei gains, benefiting from global AI trends and semiconductor demand.
  • Export-driven sectors have performed well, as the yen remains relatively weak, boosting overseas revenue for Japanese companies.
  • Japanese trust funds have increased foreign equity holdings, providing additional market support.

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Market Sentiment & Risks

  • The BoJ’s rate path remains a key focus, with investors concerned about the potential impact of further rate hikes on equity valuations.
  • Foreign investors have continued to buy into the Japanese market, with February data showing one of the largest foreign bond buying sprees since 2023.
  • Global trade uncertainty, particularly regarding US tariffs on Asian imports, remains a risk factor for export-heavy Japanese stocks.

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Sector Performance

  • Technology stocks have continued to outperform, benefiting from strong AI-related demand and semiconductor industry expansion.
  • Automakers and industrials have remained stable, though global trade concerns could impact sentiment.
  • Financial stocks have seen moderate gains, as rising interest rates in Japan could boost bank profitability.

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Short-to-Medium-Term Outlook

  • Short-term: The Nikkei 225 is expected to consolidate around 37,500–39,000, with potential for further gains if BoJ signals measured rate hikes.
  • Medium-term: A potential shift in US rate policy could drive increased foreign investment, further supporting Japanese equities.
  • Long-term: As Japan exits decades of deflation and transitions to a more normalized interest rate environment, the Nikkei could continue its strong structural uptrend.

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Conclusion

The Nikkei 225 remains one of the strongest-performing global indices, benefiting from corporate restructuring, AI-driven demand, and a stable macroeconomic backdrop. While BoJ rate hikes and global trade tensions pose risks, the medium-to-long-term outlook remains bullish, particularly as foreign investment flows and export strength continue to drive gains.

Global News
Global News & Events

United States

  • US Government Shutdown Averted – Senate Democratic leader Chuck Schumer dropped his opposition to a Republican spending bill, avoiding a government shutdown. This provided short-term relief to markets, though long-term fiscal concerns remain.
  • Tariff War Escalation – President Trump announced new tariffs on the Eurozone, including 200% tariffs on wine and champagne, alongside 25% levies on steel and aluminum. The EU responded with retaliatory tariffs on US goods, heightening trade tensions.
  • Federal Reserve Policy Uncertainty – Markets are pricing in two Fed rate cuts in H2 2025, but recent inflation data has complicated expectations. The Fed remains cautious, with Chair Powell signaling no immediate rate cuts.

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Europe

  • Germany’s €500 Billion Fiscal Package – The German government has announced a massive stimulus plan, aimed at infrastructure, defense, and technology investment. This could boost Eurozone growth, reducing the need for aggressive ECB rate cuts.
  • UK Faces Potential Austerity Measures – The UK Chancellor is set to announce spending cuts on March 26, as the government struggles to meet fiscal targets. This could weigh on GBP sentiment.

‍

Asia

  • China Stimulus Measures Expected – Officials from China’s Finance and Commerce Ministries, along with the PBoC, will hold a press conference Monday to outline new measures to boost consumption.
  • Japan’s Wage Growth Accelerates – Japan’s largest labor union secured a 5.46% wage increase, the highest in 30 years. This strengthens expectations of further Bank of Japan rate hikes in 2025.

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Geopolitical Risks

  • Middle East Tensions – Instability in the region continues to pose risks to global energy markets, with the potential for supply disruptions impacting oil prices.
  • Russia-Ukraine War – There are increased discussions of a ceasefire as European leaders push for a diplomatic resolution. Any progress could ease energy market pressures and support the Eurozone economy.

‍

Market Implications

  • Risk sentiment remains fragile, with equity markets facing volatility due to trade concerns.
  • Central bank policies are diverging, with Europe relying on fiscal stimulus while the US debates monetary easing.
  • Commodity markets remain sensitive, particularly gold and oil, which are seeing strong investor demand.

The coming weeks will be crucial for markets, with key policy decisions, earnings reports, and economic data shaping sentiment.

Disclaimer: Trade ideas provided on this page are for informational and educational purposes only and should not be considered financial advice or trading signals. These trade ideas are based on our global macro analysis and are intended to provide insight into market trends and potential opportunities.EliteTraders does not guarantee any specific outcome or profit. Trading involves significant risk, and you should always conduct your own analysis and risk assessment before making any trading decisions. By using this research, you acknowledge that EliteTraders is not responsible for any financial losses incurred based on the information provided.
Trade Ideas

1. Long EUR/USD

Rationale:

  • ECB-Fed Policy Divergence: The ECB is expected to maintain higher rates for longer, while the Fed is set to cut rates in the second half of 2025. A narrowing interest rate differential favors the Euro.
  • Stronger European Growth: Germany’s €500 billion fiscal stimulus is expected to boost domestic demand and improve overall Eurozone growth, increasing investor appetite for the EUR.
  • US Economic Uncertainty: Trade tensions, fiscal austerity, and weaker economic data from the US could weigh on the USD, reducing its relative strength.
  • Portfolio Rebalancing: Global investors have started shifting out of USD-denominated assets into European equities, further supporting EUR demand.

‍

2. Short USD/JPY

Rationale:

  • Narrowing Rate Differentials: The Fed is expected to cut rates, while the BoJ is considering further rate hikes, reducing the USD's carry trade advantage.
  • Shunto Wage Negotiations Boosting JPY: Japan’s strong wage settlement is reinforcing expectations that the BoJ will exit negative rates and raise borrowing costs further.
  • US Market Volatility: Rising uncertainty over US economic growth, Fed policy, and trade risks increases JPY’s safe-haven appeal.

‍

3. Long Gold

Rationale:

  • Safe-Haven Demand: Rising geopolitical tensions (US-China trade war, Russia-Ukraine conflict, and Middle East instability) are increasing investor demand for gold as a hedge.
  • Strong Central Bank Buying: Central banks have increased gold reserves significantly, with continued demand expected, particularly from emerging markets.
  • Inflation & USD Weakness: A weaker US dollar and potential Fed rate cuts will likely support higher gold prices in the coming months.

‍

4. Long Crude Oil (WTI or Brent)

Rationale:

  • OPEC+ Supply Cuts: Extended production cuts by Saudi Arabia and Russia are keeping supply tight, supporting oil prices.
  • Strong Global Demand: China and India’s economic activity is improving, leading to higher oil consumption.
  • Geopolitical Risks: Any further disruption in the Middle East or supply chain issues in key oil-producing nations could add a significant risk premium to crude.

‍

5. Short USD/CAD

Rationale:

  • Hawkish BoC vs. Dovish Fed: While the Bank of Canada (BoC) has been cautious with rate cuts, the Fed is expected to ease monetary policy faster, reducing the yield advantage of the USD.
  • Oil Prices Supporting CAD: Rising oil prices are positive for the CAD, given Canada’s heavy reliance on energy exports.
  • US-Canada Trade War Risks: New tariffs imposed by the US on Canadian exports could weigh on US growth, leading to a weaker USD relative to CAD.

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6. Long Silver

Rationale:

  • Industrial Demand Growth: Silver is benefiting from increasing demand in green energy (solar panels), electric vehicles, and semiconductor production.
  • Monetary Policy Support: Like gold, silver performs well in a low-interest-rate environment, and Fed rate cuts will support further gains.
  • Inflation Hedge: Higher commodity and energy prices, driven by global supply chain risks, will support silver as an inflation hedge.

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7. Short NASDAQ

Rationale:

  • Tech Sector Vulnerability: The technology sector has led the market higher, but stretched valuations make it susceptible to a pullback.
  • Trade & Tariff Risks: New US tariffs on Asian technology exports could weigh on semiconductor and consumer tech stocks.
  • Fed Liquidity Concerns: If the Fed delays rate cuts or remains restrictive longer than expected, high-growth stocks will suffer from higher borrowing costs.

‍

8. Long Platinum

Rationale:

  • Rising Demand from Hydrogen Energy & Automotives: The global push for hydrogen fuel cells and hybrid vehicle production is increasing platinum demand.
  • Supply Constraints: South Africa’s mining disruptions and Russian sanctions are limiting global supply, supporting higher prices.
  • Monetary Policy Tailwinds: Fed rate cuts and continued inflation concerns will support platinum as both an industrial and precious metal.

‍

Conclusion

  • Short USD trades (EUR/USD, USD/JPY, USD/CAD) benefit from the Fed’s expected rate cuts and US economic uncertainty.
  • Long Gold, Silver, and Platinum capitalize on inflation risks, central bank demand, and supply constraints.
  • Long Oil benefits from OPEC+ supply management and recovering demand.
  • Short NASDAQ takes advantage of stretched valuations, trade risks, and potential Fed liquidity concerns.

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