US Tariffs Lead to Market Volatility
Markets are responding to the United States’ new tariffs: 25% on imports from Mexico and most Canadian goods, and 10% on Chinese products. These measures have intensified concerns about a global trade war, leading to increased market volatility.
The GBP/USD currency pair has weakened, falling below 1.2300 as investors react to trade tensions.
Key Data Out Today
- Eurozone:
- Manufacturing PMI (January): Final reading expected to confirm a decline to 47.8, indicating contraction in the manufacturing sector.
- Unemployment Rate (December): Anticipated to remain steady at 6.5%, reflecting ongoing labor market challenges.
- United States:
- ISM Manufacturing PMI (January): Forecasted to decrease to 48.5 from 49.2, suggesting a further slowdown in manufacturing activity.
- Construction Spending (December): Expected to show a modest increase of 0.2%, indicating slight growth in the construction sector.
Commodities
- Crude Oil: Prices have risen, with WTI at $74.23 per barrel (up 2.34%) and Brent at $76.68 per barrel (up 1.33%). The increase is attributed to concerns over potential supply chain disruptions due to the new tariffs.
- Gold: The precious metal has declined by 0.37% to $2,786.72 per troy ounce, as investors reassess risk amid the evolving trade landscape.
- Silver: Similarly, silver has decreased by 0.54% to $31.11 per troy ounce, reflecting broader market uncertainties.
Currency Movements
EUR/USD
- EUR/USD: The euro has weakened against the U.S. dollar, trading at 1.0227 (down 1.33%), as Eurozone manufacturing data disappoints.
GBP/USD
- GBP/USD: The British pound has declined by 0.93% to 1.2281, influenced by concerns over the UK’s exposure to global trade tensions.
AUD/USD
- AUD/USD: The Australian dollar has fallen by 1.36% to 0.6136, reaching levels not seen since March 2020, due to its sensitivity to Chinese economic conditions.
NZD/USD
- NZD/USD: The New Zealand dollar has decreased by 1.60% to 0.5553, reflecting broader market risk aversion.
USD/JPY
- USD/JPY: The U.S. dollar has strengthened against the Japanese yen, trading at 155.63 (up 0.31%), as investors seek safe-haven assets.
USD/CNY
- USD/CNY: The Chinese yuan has depreciated by 0.28% to 7.3424, amid concerns over the impact of U.S. tariffs on China’s economy.
USD/CHF
- USD/CHF: The Swiss franc has weakened by 0.75% to 0.9180 against the U.S. dollar, as market participants favor the greenback.
USD/CAD
- USD/CAD: The Canadian dollar has declined by 1.12% to 1.4708, pressured by new U.S. tariffs and potential economic repercussions.
USD/MXN
- USD/MXN: The Mexican peso has depreciated by 1.99% to 21.0950, reflecting concerns over the significant tariffs imposed by the U.S.
USD/INR
- USD/INR: The Indian rupee has weakened by 0.50% to 87.1280, as emerging markets react to heightened global trade uncertainties.
Market Outlook
The recent introduction of significant U.S. tariffs has unsettled markets, with investors closely watching for potential retaliation from affected nations. Any countermeasures could further disrupt global trade and financial stability. Given the uncertainty, monitoring market movements is essential.
Global Markets React to New U.S. Tariffs
Australian dollar plunges, ASX drops as fears of trade war spread over Donald Trump’s tariffs
