Recent remarks from U.S. President Donald Trump have significantly influenced financial markets since the beginning of the week and are expected to impact trading on Thursday (January 23, 2024).
Trump previously announced plans to raise import tariffs on goods from Canada, Mexico, China, and Europe. Most recently, he stated that additional sanctions and tariff increases would be imposed on Russia if President Vladimir Putin does not cease hostilities in Ukraine.
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GOLD
Gold prices have seen an increase for three consecutive days, closing Wednesday’s trading session at $2,755.88 per troy ounce. Over this three-day period, the price of gold rose by approximately $55 or 550 pips, inching closer to its all-time high of $2,790 per troy ounce reached on October 31 last year.
This surge in gold prices comes in response to heightened demand for safe havens due to the uncertainty arising from Trump’s tariff hike plans. However, given the sharp increase over the last three days, there is a possibility of profit taking affecting gold in the European trading session.
OIL
Oil prices have declined for five consecutive days, ending Wednesday’s trading at $75.40 per barrel. In total, oil has dropped more than $5 over the last four days.
This decline can be attributed to Trump’s proposal to increase oil production in the United States. Additionally, recent market sentiment sees a potential for the Russia-Ukraine conflict to conclude under Trump’s administration, which could allow for a flood of oil supply from Russia back into the markets, further negatively impacting oil prices.
EURUSD
The EURUSD pair fell by 165 points (16.5 pips) to 1.04075 after previously hitting a one-month high. The reversal was largely due to profit taking, especially given the significant probability that the European Central Bank (ECB) may cut interest rates again next week.
Such sentiment is likely to exert downward pressure on EURUSD in the European trading session.
GBPUSD
The GBPUSD pair declined by 437 points (43.7 pips) to 1.23122 during Wednesday trading after previously hitting a two-week high.
The drop occurred following reports of a significant budget deficit in the UK for December, contributing negative sentiment towards GBPUSD, which is expected to persist in the European trading session.
USDJPY
The USDJPY surged by over 1,000 points (100 pips) to 156.488 on Wednesday. This currency pair is experiencing high volatility; in addition to the influence of the new U.S. administration under President Trump, market participants are also awaiting clarity on whether the Bank of Japan (BoJ) will raise interest rates during Friday’s meeting.
This sentiment is set to influence USDJPY, with upward pressure likely to strengthen as traders anticipate the BoJ’s decision and future rate projections.
Nasdaq
The Nasdaq Composite rose by 212 index points to 21,984 during Wednesday trading, approaching its all-time high of $22,151, which was established on December 16. The market is viewing the proposed but unsigned tariff hikes as possibly being resolved through bilateral negotiations.
The Nasdaq has now increased in four out of the last five trading sessions, gaining more than 770 index points overall. Such a sharp rise may lead to profit taking during the European trading session.
