The high volatility in financial markets continues as European trading commenced on Wednesday (April 9, 2025). President Donald Trump’s reciprocal policy in the United States is officially in effect as of today.
Market participants will be closely watching the progress of trade negotiations and the increasing likelihood of trade wars triggered by the reciprocal policy. As previously noted in the Macro Overview, South Korea and Japan are reportedly starting discussions with the US, and Trump expressed that a favorable agreement could be within reach.
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Simultaneously, Trump has stated he intends to raise import tariffs on China to 104%. This announcement came after China declared on Friday that it would hike tariffs on all products from the US by 34%, effective April 10.
This sentiment is expected to impact market movements during tonight’s trading.
GOLD
Gold prices (XAUUSD) continued to increase at the beginning of European trading, reaching a daily high of US$3,052.27 per troy ounce. Compared to Tuesday’s closing prices, gold has risen by over US$70, or 700 pips.
The start of the reciprocal policy and the escalating risks of a US-China trade war have led market players to flock back to safe haven assets like gold. This sentiment will likely continue to influence gold’s movements.
OIL
Oil prices (CLS10) managed to recover minor losses after plummeting to US$56.53 per barrel, marking the lowest level since January 2021. The oil market remains overshadowed by negative sentiments amid concerns of declining demand due to trade war implications.
Additionally, significant pressure is coming from OPEC+’s plans to increase production by 400,000 barrels per day.
EURUSD
EURUSD surged by 1,346 points (134.6 pips) to 1.10901 at the start of the European trading session before experiencing a pullback.
The formation of a coalition government in Germany also boosted EURUSD’s performance. The successful coalition will expedite and simplify the fiscal reforms to be implemented. This sentiment is expected to affect EURUSD’s movements in the European session.
Furthermore, positive sentiments also emerged from Trump, who expressed willingness to reach a trade agreement with the European Union, provided that the substantial trade deficit could be addressed.
GBPUSD
This currency pair followed a similar trend to EURUSD, surging over 100 pips to 1.28637 before retracing. GBPUSD rose after experiencing sharp declines for two consecutive days, reaching its lowest point in the last month.
The prospect of the European Union reaching a trade agreement with the US has also provided a positive sentiment for GBPUSD.
USDJPY
USDJPY experienced a significant drop but managed to trim its losses at the start of European trading after previously reaching 144.577. Compared to Tuesday’s closing, USDJPY fell by 166 pips, approaching a six-month low.
The high volatility in this currency pair arises from both the US dollar and the yen being considered safe haven currencies.
However, the risk of an economic slowdown in the United States opens up the possibility for the Fed to cut interest rates more swiftly, putting negative pressure on USDJPY.
Nasdaq
The Nasdaq index is trading with significant volatility in the European session, fluctuating between 16,735 and 17,449.
The escalating US-China trade war remains a negative sentiment for Nasdaq. Bloomberg reported that a Chinese Foreign Ministry official has stated they are undeterred by Trump’s plan to raise import tariffs to 104%. He articulated that intimidation, threats, and coercion are not appropriate methods for engaging with China.
Given this situation, there is potential for China to retaliate against the US, exacerbating the trade war. Should developments lead to a broader trade conflict, Nasdaq could face renewed downward pressure.
