Containers are skacked to be shipped at a port in Busan, Feb. 12. 

The Bank of Korea (BOK) on Tuesday sharply lowered its outlook for Korea's economic growth this year to 1.5 percent amid slowing export growth and weak domestic demand.

The latest figure marks a 0.4 percentage-point fall from its projection presented in November.

The country's potential growth rate is at 2 percent, and this year may mark the first time ever that the country's yearly growth rate falls below the level.

The BOK's latest projection is more pessimistic than those of other major institutions.

The finance ministry earlier forecast the economy to grow 1.8 percent this year, and the Organization for Economic Cooperation and Development (OECD) presented a 2.1 percent expansion.

Presenting a bleaker forecast, the BOK lowered its key rate by a quarter-percentage point to 2.75 percent.

As for inflation, the BOK maintained its estimate for 2025 at 1.9 percent. 

Source: Koreatimes

Bank of Korea Gov. Rhee Chang-yong strikes the gavel during a Monetary Policy Board meeting at the Bank of Korea headquarters in Seoul, Feb. 25. Joint Press Corps

Korea's central bank slashed its benchmark interest rate by a quarter percentage point on Tuesday in an effort to shore up economic growth amid weak domestic demand and uncertainties at home and abroad.

The monetary policy committee of the Bank of Korea (BOK) cut its key rate by 25 basis points to 2.75 percent during a rate-setting meeting in Seoul.

The move came a month after its rate freeze decision, which was aimed at supporting the weak local currency while assessing the impact of two rate cuts in the October and November meetings.

Tuesday's decision underlined the central bank's policy focus on economic growth as it lowered its 2025 growth outlook for Asia's fourth-largest economy to 1.5 percent from its previous forecast of 1.9 percent. 

Source: Koreatimes

The Australian Dollar declines due to escalating trade tensions.

Traders await Australia’s monthly inflation report due on Wednesday seeking key insights into the RBA’s policy outlook.

President Trump said tariffs on Canada and Mexico ‘will go forward’.

The Australian Dollar (AUD) extends its losses against the US Dollar (USD) for the third consecutive session on Tuesday. Investors eagerly anticipate Australia’s monthly inflation report on Wednesday, as it’s expected to offer crucial insights into the future course of monetary policy after the Reserve Bank of Australia’s (RBA) recent hawkish rate cut.

The risk-sensitive AUD/USD pair faces challenges due to rising risk sentient as US President Donald Trump said late Monday that sweeping US tariffs on imports from Canada and Mexico “will go forward” when a month-long delay on their implementation expires next week. Trump claimed that the US has “been taken advantage of” by foreign nations and reiterated his plan to impose so-called reciprocal tariffs.

The AUD received support as Australia’s close trading partner China released of its annual policy statement for 2025 on Sunday. The statement details strategies to advance rural reforms and promote comprehensive rural revitalization. Additionally, China’s state-supported developers are aggressively increasing land purchases at premium prices, driven by the government’s relaxation of home price restrictions to revitalize the troubled property market.

Australian Dollar remains subdued due to increased risk aversion

The US Dollar Index (DXY), which measures the USD against six major currencies, depreciates below 106.50 at the time of writing. The DXY faced challenges following the downbeat US economic data including Jobless Claims and S&P Global Purchasing Managers' Index (PMI) released last week.

President Trump signed a memorandum on Friday instructing the Committee on Foreign Investment in the United States (US) to limit Chinese investments in strategic sectors. Reuters cited a White House official saying that the national security memorandum seeks to encourage foreign investment while safeguarding US national security interests from potential threats posed by foreign adversaries like China.

The US Composite PMI fell to 50.4 in February, down from 52.7 in the previous month. In contrast, the Manufacturing PMI rose to 51.6 in February from 51.2 in January, surpassing the forecast of 51.5. Meanwhile, the Services PMI declined to 49.7 in February from 52.9 in January, falling short of the expected 53.0.

US Initial Jobless Claims for the week ending February 14 rose to 219,000, exceeding the expected 215,000. Meanwhile, Continuing Jobless Claims increased to 1.869 million, slightly below the forecast of 1.87 million.

Federal Reserve Board Governor Adriana Kugler stated on Thursday that US inflation still has "some way to go" before reaching the central bank's 2% target, noting that the path remains uncertain, according to Reuters.

The latest Federal Open Market Committee (FOMC) Meeting Minutes reaffirmed the decision to keep interest rates unchanged in January. Policymakers emphasized the need for more time to assess economic activity, labor market trends, and inflation before considering any rate adjustments. The committee also agreed that clear signs of declining inflation are necessary before implementing rate cuts.

Trump has confirmed that a 25% tariff on pharmaceutical and semiconductor imports will take effect in April. Additionally, he reaffirmed that auto tariffs will remain at 25%, further escalating global trade tensions.

The Reserve Bank of Australia (RBA) lowered its Official Cash Rate (OCR) by 25 basis points to 4.10% last week—the first rate cut in four years. Reserve Bank of Australia (RBA) Governor Michele Bullock acknowledged the impact of high interest rates but cautioned that it was too soon to declare victory over inflation. She also emphasized the labor market's strength and clarified that future rate cuts are not guaranteed, despite market expectations.

Technical Analysis: Australian Dollar tests nine-day EMA barrier near 0.6350

AUD/USD trades near 0.6340 on Tuesday, moving within an ascending channel that reflects bullish market sentiment. The 14-day Relative Strength Index (RSI) stays above 50, supporting the positive outlook.

On the upside, the AUD/USD pair tests the immediate barrier at a nine-day Exponential Moving Average (EMA) of 0.6343. A successful break above this level could improve the bullish bias and support the pair to test the key psychological resistance at 0.6400, with the next hurdle at the ascending channel’s upper boundary around 0.6440.

The AUD/USD pair could find immediate support at the 14-day EMA of 0.6329, aligned with the channel’s lower boundary.

AUD/USD: Daily Chart

Australian Dollar PRICE Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the US Dollar.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

Source: FXSTREET

Gold is nearing the $3000/oz mark, potentially reaching it briefly before a pullback.

Concerns about the stock market and a murky Fed outlook are driving investors towards gold.

Key economic data releases this week include US GDP and PCE data.

Risk aversion persisted in the markets today, as the end of February draws to a close. The risk aversion tone is a result of the ongoing uncertainty of US trade and tariff policy.

President Trump agreed to suspend tariffs for one month on Canada and Mexico in exchange for certain concessions. Will the tariffs be delayed again and scrapped entirely, is the question on the minds of market participants?

Golds Impressive 2025 – More to Come?

The Gold price rally in 2025 has also coincided with a weaker US Dollar.

Is the gold rally exhausted or will a touch of $3000/oz occur this week? That is the pertinent question this week, as $3000/oz remains a possibility.

By Friday, gold had climbed for the eighth week in a row, marking its best streak since 2020, which saw nine straight weeks of gains. While this could indicate the rally is losing steam, gold is so close to the $3,000 mark that it’s likely to at least touch that level briefly before pulling back.

Will Gold Outperform Stocks in 2025?

There is a growing belief that Gold prices may outperform stocks in 2025 as market concerns keep the metal elevated. Excluding the uncertainties around tariffs, central banks are another piece of the puzzle, with the Fed outlook in particular seeming murky.

Concerns around the stock market being overvalued and with retailers concerned about performance moving forward, this is becoming a real possibility.

Source: LSEG, Isabelnet

Data for the Rest of the week

Traders will keep an eye on the US GDP report for the fourth quarter of 2024, due later this week. Recent signs of a slowdown in the US economy, like Friday’s weaker Services PMI data, have added to the interest in this report.

There are also a host of Federal Reserve policymakers who will be speaking this week. The biggest event though from my point of view will be the Feds Preferred inflation gauge, the PCE data release on Friday.

Given the recent uptick in inflation, Fed Chair Powell urged caution about reading too much into the data. He mentioned that the Fed prefers the PCE data and thus making this data release a massive one.

Technical Analysis – Gold (XAU/USD)

Gold saw a pullback in Asian trade before bulls took control once more, propelling the precious metal to fresh all-time highs around 2956.

This move was met by significant selling pressure pushing price back down to 2930. Is this a sign of waning bullish momentum?

That is the question as the huge psychological $3000/oz handle lies in wait.

Bulls remain firmly in control at present with a break of 2956 opening up a test of 2975 on route to 3000.

I still think the 3000 handle will be hit, but the precious metal may struggle to find acceptance above this level at the first time of asking.

When we compare the current 8-week gold rally to the 9-week rally in 2020, the current one shows stronger momentum. Back in 2020, the rally ended with a bearish hammer indicating a pullback, but last week, gold closed near its highs.

Unless we see a clear reason to sell, like a drop in the stock market, gold might still hit $3,000 briefly. However, $3,000 is a significant level, and many might take profits quickly if it gets there.

Gold (XAU/USD) Daily Chart, February 24, 2025

Source: TradingView (click to enlarge)

Support

2930,2900,2882

Resistance

2956,2975,3000

Source: ACTIONFOREX

Federal Reserve Bank of Chicago President Austan Goolsbee said late Monday that the US central bank needs more clarity before going back to cut the interest rates. 

Key quotes

If the administration enacts policies that drive up prices then, by law, the Fed has to think about it.
Auto parts suppliers have expressed concerns about tariffs.
Before the Fed can go back to cutting rates the Fed needs more clarity.
Still to be determined what the entire administration's policy package entails.
Fed has to take a wait-and-see stance.  

Market reaction 

At the time of writing, the US Dollar Index (DXY) is trading 0.08% higher on the day to trade at 106.75. 

Fed FAQs

What does the Federal Reserve do, how does it impact the US Dollar?

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

How often does the Fed hold monetary policy meetings?

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

What is Quantitative Easing (QE) and how does it impact USD?

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

What is Quantitative Tightening (QT) and how does it impact the US Dollar?

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

Source: FXSTREET