The high volatility in the financial markets continues as trading commenced on Wednesday (February 5, 2025), responding to various actions taken by U.S. President Donald Trump.
This morning, Trump announced that the United States will “take control of the Gaza Strip” and stated, “we will have it.” Additionally, Trump indicated that approximately 2 million Palestinians should leave Gaza and be relocated to other countries in the Middle East.
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Such measures have the potential to escalate tensions, particularly with Iran. According to CNBC, a White House official reported that Trump intends to apply “full pressure” on Iran, aiming to reduce the country’s oil exports to nearly zero.
GOLD
Gold prices (XAUUSD) soared, shattering the previous all-time high on Tuesday. This morning, the record was broken again as Gold reached $2,858.04 per troy ounce following Trump’s press conference regarding Gaza.
Gold, regarded as a safe haven asset, has attracted market participants due to the numerous uncertainties looming in the future. The second round of trade conflicts between the U.S. and China has officially commenced, with risks of expansion to other nations as well. Consequently, the sentiment surrounding Gold remains positive during the European trading session.
OIL
This situation prompted oil prices, which had previously plummeted to $70.66 per barrel—the lowest level since December 30—to rebound and close Wednesday’s trading at $72.70 per barrel.
This rebound occurred after Trump announced plans to significantly reduce Iran’s oil exports to near zero. Currently, Iran exports about 1.7 million barrels per day; if Trump curbs these exports, global oil supply will decline, potentially driving prices higher.
Such sentiment will continue to influence oil movements during the European trading session.
EURUSD
EURUSD rose by 345 points (34.5 pips) to 1.03771 during Tuesday’s trading after previously collapsing to 1.02721. The currency pair managed to recover as China raised import tariffs on certain U.S. goods, temporarily easing fears of a large-scale trade war.
Moreover, U.S. job openings data (JOLTS) was released lower than expected, applying pressure on the dollar. Today, during the European session, the release of the Eurozone Producer Price Index (PPI) data at 5:00 PM WIB could result in significant movement for EURUSD. Forecasts from Trading Central indicate that the PPI for December is expected to grow by 0.1% year-on-year (YoY), recovering from the previous month’s -1.2% YoY.
If the data exceeds expectations, it could provide a positive sentiment for EURUSD.
GBPUSD
Similar to EURUSD, this currency pair managed to climb 289 points (28.9 pips) to 1.24775. The driving factors are aligned with the dynamics of import tariffs and U.S. economic data, meaning GBPUSD may potentially follow EURUSD during the European trading session.
However, market participants are also awaiting the Bank of England’s (BoE) interest rate announcement on Thursday.
USDJPY
USDJPY decreased by 466 points (46.6 pips) to 154.303 after experiencing volatile movements on Tuesday. This morning, USDJPY dropped further by 1.216 (121.6 pips) to 153.087.
Data released this morning from Japan indicated that average wages in December grew by 4.8% YoY, significantly surpassing the forecast of 2.1% YoY.
This release raises the possibility that the Bank of Japan (BoJ) will raise interest rates soon, strengthening the yen and dampening USDJPY.
Nasdaq
The Nasdaq managed a slight increase to 21,581 during Tuesday’s trading after previously dropping to 21,242.
The Nasdaq rebounded following China’s import tariff response, which did not affect all U.S. goods. Additionally, Trump and President Xi Jinping of China are reportedly set to discuss matters in the coming days, fostering hopes that a larger trade war may be averted.
However, given the prevailing uncertainties, negative sentiment may still loom over the Nasdaq.
