Inflation expectations lowered, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on March 3

Global market overview

1. European and American market conditions

The three major U.S. stock index futures all fell. The Nasdaq futures fell 1.74%, the S&P 500 futures fell 1.67%, and the Dow futures fell 2.13%. Germany's DAX index fell by 3.96%, Britain's FTSE 100 index fell by 2.71%, France's CAC40 index fell by 2.95%, and Europe's Stoxx 50 index fell by 3.62%.

2. Interpretation of market news

Inflation expectations have been lowered, and the British bond market has ushered in a critical pricing window

⑴ The latest economic forecast released by the British Office for Budget Responsibility (OBR) shows a key revision in its judgment on the path of inflation. The consumer price index (CPI) is expected to be 2.3% in 2026, down from the 2.5% forecast in November last year. ⑵ Longer-term forecasts remain stable. OBR predicts that the CPI from 2027 to 2030 will be 2.0%, which is exactly the same as the forecast value in November last year. This suggests that the medium-term inflation target is anchored at the central bank's target level. ⑶The reduction of inflation expectations in 2026 directly weakens the market's sense of urgency for the Bank of England to maintain restrictive policies. After the data was released, the market began to fine-tune the pricing of monetary policy, taking into account more room for expected interest rate cuts in advance. ⑷ From a trading perspective, the clarity of the inflation path provides a new basis for trading on the steepening of the British bond yield curve. What needs to be watched in the future is whether the www.xmhouses.combination of moderate inflation and falling inflation is sustainable in the context of unexpected expansion of fiscal space. This will be the core of market pricing this week.Mental logic.

The Sword of Damocles of 100-yuan oil price, the vulnerability of emerging markets goes far beyond inflation

⑴ Analysts warn that the surge in energy prices triggered by the Iran war will put pressure on emerging markets that goes far beyond inflation. If the conflict continues, Brent crude oil may rise above the $100 mark, and geopolitical risks have pushed oil prices to their highest point since July 2024. ⑵ Oil price shocks will directly erode the external balance of emerging markets. ING analysis shows that a rise in oil prices of only 10% will worsen the current account balances of emerging markets by 40 to 60 basis points, with Thailand, South Korea, Vietnam and the Philippines facing the greatest risks. ⑶ Goldman Sachs Group estimates that a supply-driven surge in oil prices from US$70 to US$85 would increase inflation by about 0.7 percentage points across emerging Asia, while reducing economic growth by about 0.5 percentage points and widening current account deficits in almost all economies. ⑷For economies with weak reserves, the situation is even more severe. Citigroup warned that a prolonged oil shock could "severely weaken" inflation expectations, leaving countries such as Argentina, Sri Lanka, Pakistan and Turkey at higher risk of capital outflows and currency depreciation. ⑸In terms of specific countries, India will be one of the most vulnerable countries to continued supply disruptions due to its scarce oil reserves. JPMorgan Chase has adjusted the EMEA emerging market foreign exchange rating to "market overweight" and separately included the Polish zloty in the "underweight" list, showing the institution's repricing of risk exposures.

Driven by both risk aversion and inflation, the U.S. dollar recorded its largest two-day gain in the past year

(1) Driven by inflationary concerns and safe-haven demand caused by the intensification of the conflict in Iran, the U.S. dollar recorded its largest two-day gain in the past year. The expansion of conflicts in the Middle East has pushed up energy prices, supporting the trend of US dollar bills as inflation expectations spiral. ⑵ Crude oil prices soared above US$85 per barrel for the first time since July 2024, and European natural gas prices soared by more than 40%, hitting their highest level since 2023. Against this backdrop, traders are scaling back expectations for easing policy from the Federal Reserve before the end of the year. ⑶Money markets are currently pricing in a 37 basis point rate cut by the Federal Reserve this year, far lower than last Friday’s 60 basis point rate cut. The 10-year U.S. Treasury yield rose 7 basis points to a three-week high. ⑷The risk reversal indicator, which is a bellwether for market positions, shows that bullish sentiment on the U.S. dollar in the short term has reached its highest point since June last year. Traders familiar with the matter revealed that physical accounts drove a large share of spot flows, trimming recent long positions in the euro and sterling.

The British Office for Budget Responsibility lowered its growth forecast for 2026 to 1.1%, and the long-term outlook was slightly revised up

⑴ British Chancellor of the Exchequer Reeves cited the latest forecast of the Office for Budget Responsibility in his half-year financial update speech on Tuesday, saying that the British economy is expected to grow by 1.1% in 2026, lower than the 1.4% predicted in the previous outlook in November last year. ⑵ The budget watchdog expects economic output to grow by 1.6% in 2027 and 2028, and by 1.6% in 2029 and 2030.5%. www.xmhouses.compared with the previous year, the forecast for 2027 and 2028 has been revised slightly upward from 1.5%.

WSJ analysis: If the Iran conflict pushes up oil prices, U.S. inflation may face a new round of upward pressure

⑴ Wall Street Journal analysis pointed out that Americans who are tired of high prices can still rely on cheap gasoline to offset spending pressure in other areas such as food in the near future, but the Iran conflict may disrupt this pattern. A rule of thumb among economists is that for every 5% increase in oil prices, year-on-year inflation measures will rise by about 0.1 percentage point. This impact accumulates over time and will have a significant effect on prices. ⑵ After the United States and Israel launched attacks on Iran, crude oil, gasoline and diesel futures prices rose sharply. How the conflict evolves will determine the direction of gas station prices and, by extension, overall inflation. The International Monetary Fund said that developments in the Middle East have made the global economic outlook more uncertain, but it is too early to judge its impact. ⑶ The president of the Austrian Central Bank said that as uncertainty has increased since the beginning of the year, the European Central Bank should be prepared to quickly adjust key interest rates in either direction if necessary, whether it is to cut interest rates again or shift to raising interest rates. ⑷In terms of market dynamics, investors have scaled back their bets on the Federal Reserve cutting interest rates this year as conflicts in the Middle East push up crude oil prices and raise concerns about inflation. Market views point out that the current problem is on the energy supply side rather than the demand side, and the Fed may choose to tolerate it. But if the war causes inflation to remain above 2% for a long period of time, it will become increasingly difficult to rationalize interest rate cuts. If inflation continues to overheat, the market is pricing in an increasing possibility of one or no interest rate cut this year. ⑸ In terms of other economic data, U.S. factory activity expanded for the second consecutive month in February; inflation in the Eurozone unexpectedly rose to 1.9% in February, and may accelerate further if energy price increases continue; Qatar's LNG production shutdown impacted the market, and European natural gas prices soared; the IMF said the situation in the Middle East made the economic outlook more uncertain, but it was too early.

The situation in the Strait of Hormuz pushed up tanker freight rates

Kpler, a shipping intelligence www.xmhouses.company, said that on Monday due to the heightened uncertainty about the situation in the Strait of Hormuz, the price of very large tanker freight futures soared 85% and then fell back. The spot freight rate on the Middle East to China route has risen from US$6.55 per barrel to US$12, reflecting restricted ship access and rising risk premiums. Data shows that about 6% of the world's oil tanker fleet is trapped in the Gulf, of which VLCC tankers that www.xmhouses.comply with new environmental regulations account for 9.6%. With restrictions on crude oil cargo loading, the few signed charters are pushing up freight rates. The market expects that the obstruction of exports from the Middle East will increase the demand for tankers in the Atlantic Basin, the U.S. Gulf Coast and India.

The third meeting of Iran’s Interim Leadership Council was held

It was learned from Iran that the third meeting of Iran’s Interim Leadership Council was held on the 3rd local time. The meeting was attended by Iranian President Pezeshizyan, Iran's Director of Justice Ezeiyeh, and members of the Guardian Council of the Constitution, Vice Chairman of the Conference of Experts and President of Iran's National Theological Seminary Arafi. It is reported that Iran’s Interim Leadership CouncilIt was established on March 1 and has held its first and second meetings in the past few days.

Fragments falling from a drone caused a fire in Fujairah, the key oil hub in the United Arab Emirates

Fragments falling from an intercepted drone caused a fire in Fujairah, the main oil trading hub in the United Arab Emirates. This is the latest incident in a series of incidents affecting major energy facilities in the Middle East. Another fire was reported in the area earlier on Tuesday, while operations at a major oil storage terminal and a refinery were suspended the previous day as the Civil Defense Force worked to contain the blaze. Fujairah is a vital bunkering port and one of the largest oil storage and trading centers in the Middle East, and is strategically important to the UAE due to its location outside the Strait of Hormuz. Fujairah also serves as a key alternative export route for the UAE through a pipeline connecting storage tanks in the region to Abu Dhabi's oil fields, but the pipeline's capacity is still insufficient to fully replace all of the UAE's oil flows through the Persian Gulf and Strait of Hormuz.

Supply disruptions in the Middle East have affected the Asian fuel oil market, and the HSFO and VLSFO crack spreads have strengthened across the board

⑴The Asian high-sulfur fuel oil market remained strong on Tuesday, with the crack spreads trading in a premium range. Data show that the April 380-cst high-sulfur fuel oil/Brent crude oil crack spread in Singapore rose to a premium of about 50 cents, and the April high-sulfur fuel oil/Dubai crude oil crack spread closed at a premium of above US$3.25 per barrel. Spot contango also extended its gains on active buying and a stronger forward curve. ⑵Traders expect fuel oil supply in Asia to become tight due to disruptions in loading in the Gulf. At the same time, the ultra-low sulfur fuel oil market also continued its rise, with the April crack spread soaring to a premium of over $12 per barrel. ⑶ In terms of refinery dynamics, Rongsheng Petrochemical, a www.xmhouses.company owned by Saudi Aramco, said on Tuesday that due to the tightening of crude oil supply due to conflicts in the Middle East, one of its 200,000 barrels/day atmospheric and vacuum units has entered maintenance ahead of schedule. ⑷ Other market news showed that Brent crude oil rose for the third consecutive day as the conflict between the United States and Iran intensified and shipping in the Strait of Hormuz was threatened. In response to the escalation of regional conflicts, Indonesia's Energy Minister said that it will increase imports of crude oil from the United States to replace part of the supply from the Middle East. Meanwhile, supertanker freight rates in the Middle East have soared to record highs.

The heart of Gulf energy was hit directly: Saudi oil refineries were shut down, Qatar LNG production was suspended, and ports in many countries were damaged

⑴ Iranian missiles and drones attacked core energy facilities in the Gulf countries. The Saudi Ministry of Defense confirmed that the Ras Tanura refinery was attacked by multiple drones on March 2, and the intercepted debris caused a fire. Saudi Aramco subsequently announced that this one of the largest domestic refineries with a daily production of approximately 550,000 barrels and a key export hub was temporarily closed. ⑵ Ras Laffan Industrial City in Qatar was attacked by ballistic missiles and drones on March 2. As the world's largest liquefied natural gas production area and a key facility that supplies about 20% of the world's LNG, Qatar Energy announced a www.xmhouses.complete suspension of production after the damage, triggering a surge in global natural gas prices. ⑶The Jebel Ali Port in the United Arab Emirates was attacked from March 1st to 2nd.Fire breaks out after missile strike. This key logistics center in Dubai is close to the condensate refinery and power facilities, and the associated energy storage and power security operations were temporarily interrupted. ⑷ Kuwait’s Ahmedimina Refinery was affected by the fall of interceptor missile fragments on March 2, and some facilities were damaged. The Port of Duqm in Oman was attacked by a drone on March 3, causing damage to a fuel tank. This is the first time that Gulf energy infrastructure has been directly targeted by Iran.

Supertankers in the Persian Gulf are in crisis, and global crude oil exports are at risk of being shut down

⑴ Data shows that there are currently only a handful of supertankers available for lease in the Persian Gulf. This logistics crisis may force this oil-rich region to shut down production and lead to a global supply shortage. ⑵According to data from ship tracking agencies, there are currently only 6 to 12 very large crude oil carriers (VLCCs) available for booking in the Gulf region. The vessels are not on any blacklists, meaning they can be chartered by any customer willing to pay soaring rents. ⑶Normally, nearly 15 million barrels of crude oil are loaded onto ships of various sizes in the Gulf every day and exported through the strait. The sharp contraction in tanker capacity is posing a direct threat to global crude oil flows.

Trump has made intensive statements: There is no need for ground war, there is enough ammunition to fight forever, and he does not care about polls

⑴ US President Trump said on Tuesday that there is no need to take ground military action against Iran. He has submitted a War Powers Act notification to Congress regarding the military action launched against Iran on February 28. ⑵Trump posted on social media that the United States' ammunition reserves have never been so sufficient and high-quality from a medium to medium-high level. With these reserves alone, we can continue fighting "forever" and win very beautifully. ⑶Trump warned that the situation in Iran is about to become even more unsafe, saying that the real big wave has not yet arrived. But he also expressed the hope that everyone would stay at home and not start violent attacks yet. ⑷ Talking about the domestic reaction, Trump said that after launching the attack, he did not care about the opinion polls, believing that he had done the right thing and that most Americans supported him - although preliminary polls showed otherwise. ⑸ Regarding foreign relations, Trump said in an interview that it was regrettable to see that the relationship between the United Kingdom and the United States is no longer what it used to be. At the same time, a Kremlin spokesman said that there are currently no plans to hold a conference call between the Russian and American presidents. ⑹ In other developments, the Federal Circuit Court of Appeals rejected the Department of Justice’s request to suspend the tariff refund process, which means that the tax refund process can be started quickly after the Supreme Court rules that most of the Trump administration’s tariff measures are invalid. In addition, some media reported that Trump appeared to have a rash on his neck when he attended the ceremony on Monday.

The closure of airspace has caused more than two-thirds of Emirates' A380s to be stranded overseas, the most serious operational disruption in history

⑴ As the airspace in the Middle East is still largely closed to civil aviation, Emirates' fleet of Airbus A380 super-large passenger aircraft is currently scattered around the world. Of the 116 double-decker aircraft operated by Emirates, only about a third have returned to its home base in Dubai. ⑵The rest flyThe planes are parked at dozens of airports in Australia and around the world. The airline has been forced to cancel more than 2,000 flights since Saturday, one of the worst disruptions ever for an operator that prides itself on round-the-clock operations and resilience. ⑶ Emirates operates far more A380s than any other airline, and this giant aircraft has become a symbol of Dubai's economic strength. While the airline has begun operating some limited evacuation flights, regular www.xmhouses.commercial operations remain cancelled. This not only highlights the devastation caused by the conflict, but also reflects the huge logistical www.xmhouses.complexities of restoring regular services.

Pakistan said that 67 Afghan personnel were killed and Afghanistan said that nearly 150 Pakistani military personnel were killed

On March 3, local time, Pakistan’s Minister of Information and Broadcasting Talal said that as of 10:00 on the 3rd, the Afghan side launched attacks on 16 locations in Pakistan’s Balochistan Province and exchanged fire with the Pakistani military in 25 locations. All attacks were effectively repelled by the Pakistani military, resulting in the death of 27 Afghan personnel and one Pakistani personnel. In a night operation in Khyber Pakhtunkhwa, 40 Afghan personnel were killed. On the same day, a spokesman for the Afghan Ministry of Defense stated that nearly 150 Pakistani military personnel had been killed and more than 200 others injured in retaliatory operations launched by Afghanistan. According to a deputy spokesman for the Afghan government, Pakistan's military strikes have killed 110 civilians and injured 123 others, most of whom were women and children.

3. Trends of major currency pairs before the New York market opens

EUR/USD: As of 21:22 Beijing time, EUR/USD fell and is now at 1.1601, a decrease of 0.75%. Before the New York session, the price of EURUSD continued to fall in the latest session, breaking above the 1.1620 support, which was expected in our previous analysis due to the dominance of the main short-term bearish trend, as it trades below the EMA50, in addition to negative signals from the relative strength indicator, despite reaching oversold levels.

GBP/USD: As of 21:22 Beijing time, GBP/USD fell and is now at 1.3311, a decrease of 0.70%. Pre-market, GBPUSD has witnessed positive swing trading at recent intraday levels after relying on key support at 1.3365 (which was the expected target in our previous analysis), gaining bullish momentum after reaching oversold levels, reinforced by the emergence of positive signals from the relative strength indicator in an attempt to recover some of the previous losses.

Spot gold: As of 21:22 Beijing time, spot gold fell, now trading at 5166.66, a decrease of 2.89%. Before the New York market opens, gold prices are atThe decline in the last session after breaking the short-term minor bullish trendline sent it into a wave of increasing negative pressure that increased by breaking support at the EMA50 and was accompanied by a clear negative signal from the relative strength indicator, indicating a sudden turn in the technical trajectory and strengthening the likelihood of continued declines in the near term.

Spot silver: As of 21:22 Beijing time, spot silver fell, now trading at 82.406, a decrease of 7.73%. In the New York pre-market, (silver) prices continued to fall on the last trading day after breaking support at the EMA50, which added to the negative pressure and pushed it to significantly deepen losses, accompanied by the emergence of negative signals from the relative strength indicator as a signal to increase selling momentum, and then confirmed the negativity of this scenario by breaking the bullish corrective trend line on a short-term basis, increasing the chances of a near-term recovery.

Crude oil market: As of 21:22 Beijing time, U.S. oil rose, now trading at 76.260, an increase of 7.08%. Pre-market in New York, (crude oil) prices surged in recent intraday trade, breaking above the $75.00 resistance, which was the expected target in our previous analysis, taking advantage of the positive signals emerging from the relative strength indicator, with the main bullish trend prevailing in the short term and the dynamic pressure represented by its exchange above the EMA50 persisting, strengthening the chances of expanding its gains in the upcoming period.

4. Institutional perspective

Deutsche Bank warns: If energy prices remain stable, the Bank of England will face variables in cutting interest rates in March

⑴ Deutsche Bank analysts pointed out in the report that if energy prices remain at the current level, the pace of interest rate cuts by the Bank of England will slow down, and the rate cut in March will face variables. ⑵ A major consideration for policymakers is that rising energy prices may make inflation expectations more sticky. The next rate cut to 3.5% may be postponed to the second quarter of this year, and the last rate cut may not even be until the fourth quarter. ⑶ Analysts believe that if energy prices soar to US$100 per barrel, the next interest rate cut may not be until the second half of 2026, and the end-point interest rate may be pushed up to 3.5%. ⑷ However, analysts also mentioned that if the surge in www.xmhouses.commodity prices reverses, the Bank of England may maintain its baseline forecast of reaching a target interest rate of 3.25% through two interest rate cuts.

The above content is all about "[XM Foreign Exchange Market www.xmhouses.commentary]: Inflation expectations lowered, analysis of short-term trend of spot gold, silver, crude oil and foreign exchange on March 3", which was written by XThe M foreign exchange editor carefully www.xmhouses.compiled and edited it, hoping it will be helpful to your trading! Thanks for the support!

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