The recent developments regarding the US dollar and the trade conflicts between the US and China have significant impacts on the global economy. Here are key points for investors in the German-speaking region:
US Dollar Development
The US dollar has recently suffered losses, partly due to the ongoing trade conflicts. The dollar index fell temporarily by more than 2%, marking its lowest level in six months. This weakness is exacerbated by risks in the markets as investors turn away from risky assets and seek safe havens like gold.
Trade Wars and Tariffs
The US has imposed new tariffs, further straining trade relations with China. Beijing has subsequently announced retaliatory tariffs of up to 125% on US products. These measures increase the risk of recession in the US as they drive up inflation and reduce disposable income.
Inflation Risks
The tariff increases could lead to rising consumer prices in the US. LBBW Research revised its inflation forecast for 2025 from 3% to 4%, which could create further economic uncertainties.
Recession Risks
Larry Fink of Blackrock warned that many CEOs already see the US economy in recession. According to Polymarket, the probability of a recession in 2025 is estimated to be as high as 50%.
Impact on European Markets
The euro is benefiting in the short term from the weakness of the US dollar. However, long-term economic uncertainties could also have negative effects on European markets.
Recommendations for Investors
- Investors should remain calm and avoid hasty decisions.
- Long-term investments should be maintained.
- Diversification of the portfolio can help minimize risks.
- Alternatives like emerging markets or regional ETFs could be worthwhile.
In summary, the ongoing trade conflict burdens both the US dollar and the global growth environment, increasing the risk of economic instability worldwide.