The second term of Donald Trump’s presidency officially commenced after his inauguration as the 47th President of the United States on Monday. Market volatility experienced a significant increase, which continued into trading on Tuesday morning (January 21, 2025).
The US dollar faced downward pressure early last week but rebounded this morning after Trump announced considerations to impose a 25% increase in import tariffs on goods from Canada and Mexico starting February 1.
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GOLD
The price of Gold (XAUUSD) soared to a two-month high during Tuesday morning’s trading. Compared to Monday’s closing, Gold surged by $22.76 or 227.6 pips.
Trump’s plans to raise import tariffs have raised concerns about the possibility of a trade war with Canada. Canadian Prime Minister Justin Trudeau previously indicated that Canada would respond if tariffs were indeed raised.
This uncertainty has increased Gold’s appeal as a safe haven asset, pushing its prices higher. This sentiment is likely to continue influencing Gold during the European trading session.
OIL
Oil prices (CLS10) fell by more than $1 to $76.35 per barrel during trading on Monday following Trump’s announcement of increased domestic production.
However, this morning, Oil prices briefly rose to $77.16 amid fears of a potential trade conflict with Canada. As one of the largest Oil suppliers to the United States, disruptions in supply are a concern if hostilities arise. This sentiment will likely affect Oil trading during the European session.
EURUSD
The EURUSD currency pair jumped 1,478 points (147.8 pips) to 1.04165 on Monday, but this morning it fell by 64 pips to 1.03522 following Trump’s announcement regarding increased tariffs.
During the European session, the release of German consumer sentiment data at 17:00 WIB could serve as a catalyst for EURUSD movements. Forecasts from Trading Central indicate a consumer sentiment of 14 for this month, down from 15.7 the previous month.
Any data release below forecast could exert additional pressure on the EURUSD rate.
GBPUSD
The announcement about increasing import tariffs has strengthened the US dollar, impacting GBPUSD, which dropped by 800 points (80 pips) to 1.22475 after skyrocketing over 160 pips on Monday.
The UK will release labor market data at 14:00, which may influence GBPUSD movements during the European session. Forecasts from Trading Central indicate an employment change of 40,000 for November, significantly lower than the previous month’s 173,000.
Any data falling short of forecast could further pressure this currency pair.
USDJPY
The USDJPY pair has shown high volatility this morning, fluctuating between 154.769 and 156.230. Trump’s plans to raise tariffs could accelerate inflation within the US, prompting The Fed to be more cautious in lowering interest rates.
On the other hand, this situation generates high uncertainty, impacting the US economy. Consequently, the yen’s allure as a safe haven increases, contributing to USDJPY’s volatility.
This sentiment is anticipated to continue affecting USDJPY movements during the European trading session, with potential downward pressure expected.
Nasdaq
The Nasdaq index recorded a rise to 21,680 during Monday’s trading before plummeting by more than 300 index points to 21,373 this morning. Trump’s plan to increase import tariffs negatively affected stock indices, suggesting that Nasdaq might continue to face pressure during the European trading session.
