The inauguration of Donald Trump as the 47th President of the United States continues to exert a significant influence on market volatility during the early European trading session on Tuesday (January 21, 2025). More decisive movements are anticipated later tonight as Trump may issue additional executive orders.
Earlier today, Trump indicated he is considering a 25% increase in import tariffs from Canada and Mexico starting February 1, which has triggered considerable fluctuations in financial markets.
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GOLD
Gold (XAUUSD) prices have continued to rise during the early European session, reaching US$ 2,732.87 per troy ounce. This marks an increase of US$ 26.53, or 265.3 pips, compared to Monday’s closing prices, achieving a two-month peak before experiencing some correction.
The surge in gold prices is attributed to concerns that Trump’s proposed tariff hikes could lead to a trade war with Canada. Canadian Prime Minister Justin Trudeau has previously commented that Canada will respond if tariffs are raised.
This sentiment is expected to continue influencing gold market movements throughout tonight’s trading. The allure of gold as a safe haven increases significantly if Trump signs the tariff increase executive order.
OIL
Oil (CLS10) prices showed volatility, fluctuating between US$ 76.07 and US$ 77.17 per barrel leading into the early European session. This movement stems from Trump’s plans to enhance domestic oil production, generating a negative sentiment.
Conversely, the risk of a trade war with Canada could further impact oil supply, considering Canada is a major oil supplier to the United States. This sentiment is likely to continue affecting oil prices during tonight’s trading.
EURUSD
The EURUSD pair saw a decline of 643 points (64.3 pips) to 1.03552 this morning and remains near this level into the afternoon.
Data from Germany indicates that consumer sentiment has dropped to 10.3, falling below the forecast of 14 from Trading Central and down from the previous month’s 15.7. This data adds pressure to the EURUSD and is expected to be felt in tonight’s trading.
GBPUSD
GBPUSD continued its downward trend during early European trading, hitting a level of 1.22344. Compared to Monday’s close, this currency pair has plummeted by over 90 pips. Data from the UK revealed a rise in the unemployment rate in November of last year, further exerting downward pressure on GBPUSD.
This data suggests a deteriorating labor market and strengthens expectations that the Bank of England (BoE) will cut interest rates in early February. Additionally, the market anticipates at least four rate cuts from the UK central bank throughout the year.
USDJPY
The USDJPY pair showed volatility within a range of 154.769 to 156.230 during early European trading. Trump’s planned tariff increases could accelerate inflation in the US, leading the Federal Reserve to exercise caution regarding interest rate reductions.
On the flip side, this situation creates significant uncertainty, impacting the US economy. As a result, the yen’s appeal as a safe haven is also on the rise, contributing to the volatility of USDJPY.
This sentiment is anticipated to influence USDJPY movements during tonight’s trading, potentially leading to stronger positive sentiment.
Nasdaq
The Nasdaq index dropped over 300 points to 21,373 early this morning following Trump’s announcement regarding planned tariff increases. Subsequently, the Nasdaq managed to trim its losses.
However, there is a risk that the Nasdaq could face renewed pressure if Trump ultimately signs the executive order to raise tariffs.
