Earlier last week, the high-level economic and trade talks between China and the United States reached an important consensus and made substantial progress, which was directly reflected in the significant reduction of bilateral tariff levels. The financial market responded positively, and since then, the three major U.S. stock indexes have continued to rise. The U.S. dollar exchange rate is still consolidating at recent highs. But last Friday, Trump said that the United States may unilaterally set new tariff rates on many trading partners in the next two to three weeks. At that time, he explained that the United States lacked the ability to reach agreements through negotiations with all trading partners.

In addition to tariffs, Trump also said that he would call Putin on Monday (May 19) to discuss stopping the Russian-Ukrainian conflict and trade-related issues; then he would call Zelensky and communicate with many NATO members together with Zelensky.

Last week, Bitcoin continued to hover around $103,200, and the rebound in tariff risk aversion suppressed buying. The U.S. dollar index was sideways at 100.97 before the weekend, and gold rebounded to $3,203. U.S. President Trump expressed his willingness to go to China to meet with Chinese President Xi Jinping. But he stressed that the United States will soon unilaterally impose tariffs on many countries.

Review of market performance last week:

Last week, the three major U.S. stock indexes closed higher, with major stock indexes all closing higher. The S&P 500 rose for the fifth consecutive day, and most large technology stocks rose. The market believes that this is mainly due to the easing of trade tensions. Investors also paid attention to Trump's new policies on taxes and spending. The optimism about the trade agreement masked the negative impact of the plunge in consumer confidence data. The Dow Jones Industrial Average rose 3.41% this week to close at 42,654.74 points; the S&P 500 rose 5.27% this week to close at 5,958.38 points; and the Nasdaq Composite Index rose 7.15% this week to close at 19,211.10 points.

Last week, the price of gold fell to close at about $3,202 per ounce, hitting a one-month low of $3,120 earlier in the session. It will fall more than 3.6% this week as easing global trade tensions weaken its appeal as a safe-haven asset. Geopolitical risks also appear to have eased, with the India-Pakistan ceasefire agreement holding steady. However, progress in talks between Russia and Ukraine showed signs of stalling. Meanwhile, benign U.S. inflation data, which typically supports non-yielding metals, reinforced market expectations that the Federal Reserve will cut interest rates at least twice this year.

Silver prices closed down last week at $32,300 an ounce, giving up gains from the previous session as easing global trade tensions reduced demand for safe-haven assets. Reducing geopolitical risks have led the market to reduce expectations for aggressive rate cuts from the Federal Reserve, putting downward pressure on silver. However, recent data has shown easing inflationary pressures in the United States, which has provided some support for precious metals as a weaker dollar makes silver more attractive to non-U.S. buyers.

The U.S. dollar strengthened last week, rising for the fourth consecutive week. The latest round of economic data showed a rebound in import prices in April, while consumer confidence remained subdued in May as concerns over the impact of President Trump's trade policies intensified. The U.S. dollar index was in a consolidation phase last week and is currently hovering around the 101.00 level. The U.S. dollar index is likely to turn from positive to negative last week amid market doubts about the stability of the Trump administration's trade policies. At this stage, the US dollar index may be on the verge of crisis, and more and more financial market participants are beginning to question the dollar's reserve currency status, especially considering the instability of the Trump administration's policies.

The euro fell against the dollar last week, closing at $1.1172. The euro fell 0.67% last week, the biggest weekly drop since early February. As trade tensions eased and risk appetite rekindled, the cost of using credit default swaps (CDS) to insure euro-denominated credit defaults fell accordingly. The dollar rose 0.21% against the yen last week to close at 145.69. Data on Friday showed that Japan's gross domestic product (GDP) shrank for the first time in a year in the first quarter, highlighting the fragility of Japan's economic recovery in the face of the threat of US President Trump's trade policy.

The pound ended a slight decline of 0.15% against the dollar last week, closing at 1.3288 before the weekend. Due to a surge in capital goods costs and a weaker dollar. GBP/USD's reaction to US data was delayed, but it eventually fell below 1.33. The Australian dollar stabilized above $0.64 last week after a volatile week as investors are eyeing the Reserve Bank of Australia's policy decision next week. The Australian job market performed strongly in April, with the unemployment rate remaining unchanged at 4.1% and the employment change figure unexpectedly surging to 89,000. These data may cause some hesitation at the Reserve Bank of Australia's meeting next Tuesday.

WTI crude oil spot prices closed at $61.90 per barrel last week, recording a weekly gain of more than 2%, their second consecutive week of gains as easing US-China trade tensions boosted sentiment. The 90-day tariff truce between the world's two largest oil consumers helped ease concerns about weak demand. Meanwhile, uncertainty remains about a possible US-Iran nuclear deal, which could add 400,000 barrels per day to the market supply. Despite the potential supply increase, expectations of a US interest rate cut continue to support the bullish outlook as it could stimulate economic activity and oil demand.

Bitcoin hovered around $104,000 before the end of last week, with bulls facing strong resistance on their upside. Although US President Trump's "Liberation Day" tariffs have cooled down and his second son Eric Trump has assured that the United States will hoard a large amount of Bitcoin, three major negative factors are pressing. The US GENIUS stablecoin bill has encountered challenges, Coinbase exchange is facing investigations, and FTX has announced a repayment plan, which has intensified panic before the weekend.

Before the weekend, the yield on the 10-year US Treasury bond fell to 4.4% from a three-month high of 4.55% hit in the middle of the week, as the latest data showed that the Federal Reserve may cut interest rates several times this year. Consumer and wholesale costs in April were lower than expected, indicating that the tariffs imposed by the White House did not immediately trigger an increase in price levels. Yields are still more than 23 basis points higher since the beginning of this month. The United States and China jointly reduced mutual tariffs for the next 90 days, easing concerns that trade barriers may lead to a recession and triggering a sharp rebound in risk sentiment and long-term US Treasury yields.

Market Outlook for This Week:

Market sentiment remains high; but trade clouds remain

The Trump administration has developed a pattern of threatening disruptive policy changes before implementing them, then withdrawing, temporarily shelving or completely canceling them at the last minute. The market generally expects that Trump's policy strategies will continue to be rolled back; however, bullish sentiment may remain moderate until the Trump administration provides some substantive results and provides some clarity on the multiple trade agreements that White House staff insists are about to be announced, which have been mentioned for two months.

In the latest post, Trump also urged Federal Reserve Chairman Powell to take action to cut interest rates as soon as possible. This week, several heavyweight officials of the bank will speak, including Vice Chairman Jefferson, and New York Fed President Williams.

On the other hand, as global markets continue to be affected by both macroeconomic factors and geopolitical backgrounds, investors' attention is quickly turning to economic data and central bank decisions to be released this week. The US dollar fluctuates under the influence of the US-China trade agreement and the Fed's policies; the British pound focuses on CPI data, and slowing inflation may increase expectations of interest rate cuts; the Japanese yen focuses on GDP and CPI data, and accelerated inflation may support the Japanese yen; the euro is affected by the Russian-Ukrainian conflict and PMI data; the Australian dollar will focus on the interest rate decision of the Reserve Bank of Australia; the Canadian dollar is affected by the CPI and oil price trends.

Crisis moment under the battle between long and short: observation of the US dollar market

This week, the US dollar fluctuated under the influence of the US-China trade agreement and the Fed's policies; the British pound focuses on CPI data, and slowing inflation may increase expectations of interest rate cuts; the Japanese yen focuses on GDP and CPI data, and accelerated inflation may support the Japanese yen; the euro is affected by the Russian-Ukrainian conflict and PMI data; the Australian dollar will focus on the interest rate decision of the Reserve Bank of Australia; the Canadian dollar is affected by the CPI and oil price trends.

This week, the focus is on speeches by several Fed officials, European Commission President von der Leyen visits the UK for a summit, the G7 finance ministers and central bank governors meeting is held on Tuesday, and the Reserve Bank of Australia announces its interest rate decision. The market expects the Reserve Bank of Australia to cut interest rates by 50 basis points next week on the grounds that the US tariff measures have affected business and consumer confidence and domestic economic growth in Australia.

The dollar is expected to benefit from the positive market sentiment brought about by the US-China trade agreement. The agreement improves the outlook for the US economy, and further easing of tensions in global relations may provide additional support for the dollar. At the monetary policy level, the Federal Reserve seems to be reserved about a large interest rate cut before the end of the year, and the market currently expects the Federal Reserve to cut interest rates twice before the end of the year. If the Fed's policy does not meet market expectations, the dollar's trend may adjust accordingly.

Geopolitical situation and expectations of the Fed's policy shift may be the fuse of cost week volatility

With the withdrawal of recently announced tariffs, gold prices have retreated from an all-time high of $3,500 per ounce. Despite this, the market continues to be optimistic about the outlook. Supported by US policy uncertainty, geopolitical conflicts and inflation concerns, gold prices will fluctuate between $3,000 and $3,400 per ounce in the second and third quarters.

Looking ahead to this week, although the US data is relatively light, it will usher in speeches from several Federal Reserve officials, and after Trump returns from his trip to the Middle East, he may make more remarks and moves on trade, which will increase the volatility of gold prices. From a larger cycle perspective, gold is still in an upward trend because real yields may continue to fall under the Fed's loose policy. But in the short term, the repricing of interest rate cut expectations may put pressure on gold, so we need to pay close attention to economic data and the Fed's remarks.

In addition, regarding the geopolitical situation, both the US-Iran agreement and the Russia-Ukraine talks may become important factors in determining whether gold prices will fall to the 3,000 mark this week.

The Russia-Ukraine talks are said to be "likely to work", can US oil hold $60/barrel this week?

This week's crude oil market outlook: resistance remains, with a bearish tendency. The crude oil market is still limited by technical and fundamental resistance. Coupled with the potential increase in supply from OPEC+ and Iran, the short-term trend is biased towards a decline.

In addition, this week's news on the Russia-Ukraine talks and the US-Iran agreement are expected to be the key to whether US oil will target the $60/barrel mark. If there is more optimistic news, oil prices may start a bearish market, or even start trading below $60/barrel. The key support level is around $59.13, which is the pivot point of the $54.83 to $63.43 trading range. A break below this level may trigger further selling. In the absence of a clear bullish catalyst, the forecast is bearish. Previously, Trump said that his view on oil prices is a range of $40 to $50 per barrel.

Conclusion:

On the whole, the focus of the market this week is on the impact of the US-China trade agreement and the Fed's policy on volatility, and the guidance of economic data from the UK, Japan, and the United States on the policy path. Stagflation risks may increase volatility in the UK market, while Japanese inflation data will directly affect bond yields and expectations of the Bank of Japan's policy. In addition, the euro is affected by the Russian-Ukrainian conflict and PMI data; the Australian dollar will focus on the impact of the Reserve Bank of Australia's interest rate decision on the future market trend.

With multiple factors intertwined, short-term market fluctuations may be difficult to avoid, but for traders, this is the window period for finding trading opportunities. In operations, it is necessary to pay attention to the time nodes of major risk events and flexibly adjust positions to deal with potential market shocks.

Overview of important overseas economic events and matters this week:

Monday (May 19): Trump will hold phone calls with Putin, Zelensky and NATO member states, Nvidia CEO Huang Renxun shares the latest progress and breakthroughs in "AI and accelerated computing technology", the final value of the Eurozone CPI annual rate in April, the speech of Federal Reserve Vice Chairman Jefferson, the speech of New York Fed President Williams, and the monthly rate of the US Conference Board leading indicators in April

Tuesday (May 20): Dallas Fed President Logan hosted a panel meeting at the Atlanta Summit, the Reserve Bank of Australia announced its interest rate decision, the Reserve Bank of Australia President Bullock held a monetary policy press conference, the European Central Bank Board member Wunsch spoke, and Google held its annual I/O developer conference

Wednesday (May 21): St. Louis Fed President Mousalem spoke on economic prospects and monetary policy Speech, Bostic Fed chairs meeting, voting members Hammack and Daly deliver keynote speeches, UK April CPI monthly rate, US EIA crude oil inventory for the week ending May 16

Thursday (May 22): Richmond Fed President Barkin attends an event called "Fed Listens", Eurozone May manufacturing/services/composite PMI preliminary values, ECB releases April monetary policy meeting minutes, US initial jobless claims for the week ending May 17, US May S&P Global manufacturing/services/composite PMI preliminary values

Friday (May 23): New York Fed President Williams delivers a keynote speech at the Monetary Policy Implementation Seminar, Japan April core CPI annual rate, Germany's first quarter unadjusted GDP annual rate final value, US April new home sales total annualized data

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