The import tariffs imposed by the United States (US) have sparked significant volatility across global financial markets.
Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum announced their agreement with US President Donald Trump to enhance border law enforcement in response to Trump’s demands for stricter action on immigration and drug smuggling. In return, Trump has postponed the increase in import tariffs for 30 days.
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However, no such delay has been granted for China, and the proposed 10% tariff increase is slated to take effect on February 4 local time.
These sentiments are expected to influence market movements, with high volatility anticipated in trading on Tuesday (February 4, 2025).
GOLD
Gold prices initially plummeted to $2,772 per troy ounce due to profit-taking but later rebounded to set a new all-time high at $2,830.68 per troy ounce. Following this, Gold trimmed its gains, closing the trading session on Monday at $2,814.46 per troy ounce.
The dynamics of US import tariffs are driving an increase in demand for Gold as a safe haven. Although Trump has delayed the tariff hikes from Canada and Mexico, uncertainty remains high, particularly with the impending tariffs from China. Thus, Gold is likely to continue receiving positive sentiment, with the possibility of breaking its previous all-time high.
OIL
In contrast to Gold, oil prices surged to $75.15 per barrel at the beginning of Monday’s trading but subsequently fell to close at $72.31 per barrel.
The oil market is under pressure due to the delayed implementation of import tariffs from Canada. It’s worth noting that imports of oil from Canada will still incur a 10% tariff, making the sales price more expensive. However, with the 30-day delay, oil has once again faced downward pressure.
EURUSD
The EURUSD currency pair plunged nearly 1,500 points (150 pips) on Monday, closing at 1.03426. The postponement of the tariff hike allowed this currency pair to recover from the pressure.
Nevertheless, the anticipated 10% tariffs on China still present a risk of a second trade war between the two nations. Hence, EURUSD continues to be overshadowed by negative sentiment.
GBPUSD
GBPUSD managed to climb 579 points (57.9 pips) to 1.24486 on Monday’s trading after previously dropping more than 140 pips. However, similar to EURUSD, this currency pair is still influenced by the negative sentiments related to the US-China trade war risks.
Furthermore, the anticipated interest rate cut by the Bank of England (BoE) scheduled for Thursday adds additional pressure.
USDJPY
The USDJPY pair exhibited extreme volatility, fluctuating between 153.997 and 155.870 at the week’s onset, before closing at 154.758. Both the US dollar and the yen are considered safe havens, leading to a volatile response to the shifting tariff dynamics.
Despite this, the US dollar might show more dominance during the European trading session, given the potential for a trade conflict between the US and China.
Nasdaq
The Nasdaq index fell by over 600 points early in the week before rebounding to close at 21,551. Compared to its closing on Friday, the Nasdaq experienced a slight drop of just 20 points.
The postponement of tariff increases from Canada and Mexico spurred a recovery in the Nasdaq. However, with the looming threat of a second trade war between the US and China, the Nasdaq is still expected to face negative sentiment.
