The US dollar plummeted to three-month lows on Wednesday as the trade war with its partners escalated. The euro surged to its highest in four months, while European stocks surged to record highs. German government bonds experienced their worst one-day sell-off in over 25 years after a major overhaul of fiscal policy was announced.
Beijing retained its economic growth target of 5% for 2025, and the Chinese offshore yuan strengthened against the dollar. However, crude oil fell to six-month lows due to fears of weaker global economic activity. The US S&P 500 index slid 1.2%, but futures rose 0.7%.
The US trade war with Canada, Mexico, and China went into effect on Tuesday, prompting a retaliation from its partners. President Donald Trump’s State of the Union address also raised concerns about further escalation.
A major overhaul to German government borrowing has sent shockwaves through the global markets, with economists warning that investors should “rip up” their previous analysis. The move is seen as significant, given Germany’s benchmark status for other markets.
The US dollar index tumbled 0.5% to 105.03, bringing its losses over the last three days to 2.3%, the most in this timeframe since late 2022. The euro rose 0.6% to $1.0693, prompting a flurry of bullish forecasts from major investment banks.
Oil prices fell for a third day due to concerns about energy demand and OPEC+ plans to raise output in April.
Source: https://www.reuters.com/markets/global-markets-wrapup-1-2025-03-05