The markets have been displaying significant volatility in response to U.S. President Donald Trump’s policies, which may continue into trading on Tuesday night (February 11, 2025). This is due to the testimony from a Federal Reserve governor scheduled to take place before the U.S. Congress at 10:00 PM WIB.
This testimony could trigger substantial market movements if any indications about potential interest rate cuts by the Fed are mentioned.
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GOLD
Gold prices (XAUUSD) have reversed their course, dropping to $2,901.83 per troy ounce after previously skyrocketing to an all-time high of $2,942.61 per troy ounce. The surge in gold prices earlier today followed President Trump’s official signing of an executive order that raises import tariffs on steel and aluminum by 25% from all countries, effective March 4.
Alongside the increase in tariffs on steel and aluminum, Trump also announced that he would disclose reciprocal trade policies within the next two days. This reciprocal approach means that if other countries increase import tariffs on U.S. goods, Trump will respond by raising tariffs on their goods. This escalates the risk of a larger trade war, boosting the demand for gold as a safe haven.
Current attention is focused on Powell’s testimony, as indications of a cautious approach to rate cuts in light of inflation developments—especially following the tariff hikes—could lead to profit-taking in gold.
OIL
Oil prices (CLS10) increased at the beginning of the European trading session, reaching a daily high of $73.19 per troy ounce. Compared to Monday’s trading close, oil is up by $0.73.
The rise in oil prices follows a decrease in OPEC+ production levels in January, which fell below the established quotas. Additionally, market participants foresee a potential future supply drop as the United States is set to impose sanctions to curb Iranian exports, along with risks of sanctions on Russia.
These developments lend a positive sentiment towards oil, although the looming threat of a significant trade war continues to cast a shadow over demand estimates.
EURUSD
EURUSD saw an increase at the beginning of the European trading session, hitting a daily high of 1.03220 after previously dipping to 1.02921. The rise can be attributed to France’s unemployment rate for Q4 2024, reported at 7.3%, lower than the 7.6% forecast by Trading Central and down from 7.4% in the previous quarter.
However, there is potential for EURUSD to face downward pressure during tonight’s trading, especially if Powell indicates a more cautious stance regarding interest rate cuts.
GBPUSD
GBPUSD rebounded to 1.23780 at the start of the European trading session after previously falling to 1.23322. Similar to EURUSD, this currency pair might also face downward pressure if Powell signals a more cautious approach to rate cuts.
If this occurs, there is a potential for interest rates in the UK to fall below those in the United States, as the Bank of England (BoE) is likely to consider further rate cuts soon.
USDJPY
USDJPY has exhibited volatility within the range of 151.646 to 152.097 heading into the early European trading session. Both the dollar and yen are considered safe-haven assets, contributing to the volatility in USDJPY movements.
Nonetheless, a positive sentiment could temporarily uplift USDJPY based on Powell’s testimony tonight, particularly if there are indications of interest rates being held steady for a longer duration.
Nasdaq
The Nasdaq has declined during the early European trading session, hitting a daily low of 21,719. Compared to Monday’s trading close, Nasdaq has decreased by 117 index points.
The index is still under the negative influence of heightened trade war risks, making it vulnerable to further declines. This negative sentiment is likely to intensify if Powell suggests a more cautious approach to interest rate cuts.
