United States President Donald Trump announced a new 25% import tariff on goods from Canada and Mexico, set to take effect on March 4 local time, leading to significant fluctuations in financial markets at the beginning of the week.
In addition, China will face an increased tariff of 10%, raising the total to 20%. Trump also revealed that the reciprocal trade policy will start on April 2. Under this new policy, if another country raises import tariffs on goods from the U.S., Trump will respond by increasing tariffs on products from that country.
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This sentiment is expected to continue influencing market movements on Tuesday (March 4, 2025).
GOLD
Gold prices (XAUUSD) surged more than $35 to $2,992.55 per troy ounce at the beginning of the week. The demand for gold is likely to remain high as the threat of a more extensive trade war escalates.
China has stated it will retaliate against the tariff increases imposed by the United States. Similarly, Canada and Mexico may also take corresponding actions.
This sentiment will continue to impact gold market movements during the European trading session today.
OIL
Oil prices (CLS10) dropped by $1.5 earlier this week to $68.46 per barrel and continued to decline today to $67.94 per barrel, marking the lowest level in nearly three months.
The fall in oil prices followed the release of the ISM Manufacturing Purchasing Managers’ Index (PMI) from the United States, which indicated a slowdown in expansion, potentially leading to decreased oil demand. Additionally, pressure is mounting after reports that OPEC+ plans to increase production next month.
These negative sentiments are expected to keep oil prices under pressure during the European trading session.
EURUSD
The EURUSD pair climbed 1.114 points (111.4 pips) to 1.03887 at the beginning of the week. This increase followed remarks from British Prime Minister Keir Starmer last Sunday, stating that European leaders would assist Ukraine in developing a peace proposal to be communicated to Trump.
Renewed hopes for an end to the Russia-Ukraine conflict have generated a positive sentiment toward the EURUSD.
GBPUSD
Similar to the EURUSD, this currency pair rose by 1.198 points (119.8 pips) to 1.26975 at the beginning of the week. This represents the highest level since mid-December.
The GBPUSD is benefiting from favorable sentiment as the United Kingdom is unlikely to become embroiled in a trade war with the United States. This follows negotiations between the two nations, suggesting a trade agreement may occur without the need for increased import tariffs.
This sentiment will continue to affect GBPUSD movements during the European trading session.
USDJPY
The USDJPY dropped 1.136 points (113.6 pips) to 149.467 in early trading at the beginning of the week. The U.S. dollar has been pressured due to the release of manufacturing PMI data that indicates a slowdown in expansion. Additionally, data released last Friday showed a deceleration in core inflation based on the Personal Consumption Expenditure (PCE) index.
These data points have led the market to anticipate that the Federal Reserve may cut interest rates twice this year. Conversely, the Bank of Japan (BoJ) is likely to raise interest rates in the near future.
This sentiment could continue to exert pressure on USDJPY in the European trading session.
Nasdaq
The Nasdaq fell by 413 index points to 20,530 in Monday’s trading, reaching its lowest level in over three months. The broader threat of a trade war has prompted significant selling in the Nasdaq.
Furthermore, the existence of reciprocal trade policies could lead to more expansive trade conflicts that might hinder global economic growth, reminiscent of the situation in 2018-2019. This scenario continues to pose potential pressure on the Nasdaq.
