Financial Market Newsletter

In his testimony before Congress last night, Federal Reserve Chair Jerome Powell reiterated the central bank’s concerns that elevated tariff levels could derail the years-long effort to rein in inflation.

The USD Index declined by 0,43% on Monday, retracing some of its recent gains, as several Federal Reserve policymakers indicated that the U.S central bank should soon consider cutting interest rates.

The USD extended its gains at the start of the week as markets sought shelter from rising geopolitical risks following a U.S airstrike on Iran.

The USD Index held at its highest level since February on Tuesday, as escalating tensions between Israel and Iran continued to dominate global financial markets.

The U.S Federal Reserve announced late Tuesday that it would maintain its benchmark interest rate within the 4,25% - 4,5% range, while reaffirming its projection for two rate cuts by the end of 2025.

Retail sales in the United States fell for the second consecutive month, signaling that concerns over tariffs and personal finances have led consumers to scale back spending following a surge earlier this year.

China’s factory activity took a significant hit last month due to tariffs imposed by President Donald Trump, despite a temporary trade truce with the United States.

The recent escalation in conflict between Israel and Iran over the past weekend may delay the timeline for potential U.S interest rate cuts, as the Federal Reserve evaluates possible inflationary consequences.

Tariff-induced inflation has proven to be less severe than anticipated, while signs of a weakening U.S labor market have increased the likelihood that the Federal Reserve may soon lower interest rates in the coming months.