The Job Openings and Labor Turnover Survey (JOLTS) draws significant attention this week as analysts gear up for the January employment report slated for release on Friday. Job openings are projected to reach 8 million in December, a critical indicator for Federal Reserve officials when determining monetary policy. Meanwhile, the US has temporarily suspended tariffs on imports from Canada and Mexico for 30 days. This move has momentarily alleviated concerns over potential North American trade disruptions.
A 10% tariff increase on Chinese imports took effect on Tuesday, sparking market volatility and reducing risk appetite. In response, China announced counter-tariffs, further escalating tensions and affecting market sentiment. The EUR/USD pair experienced notable losses, trading near 1.0300 in early European markets on Tuesday. The situation has also impacted the Australian dollar (AUD), which remains under selling pressure against the Canadian dollar (CAD) due to rising geopolitical risks and trade tensions.
In the European morning on Tuesday, AUD/USD traded around 0.6200, halting its recovery trajectory. Renewed demand for the US Dollar, seen as a safe haven, contributed to the pair losing ground. A decisive breakdown below the 0.89655 support zone could reinforce the bearish trend, exposing further downside targets at 0.89328, 0.88912, and 0.88452. Conversely, a confirmed breakout above 0.90858 would negate the bearish outlook, potentially shifting sentiment towards higher levels.
Amid these developments, investors remain cautious about possible US tariffs on the Euro area. President Trump's tariff measures on China have intensified trade war anxieties, with Beijing's retaliatory actions amplifying these fears. The Canadian dollar has exhibited relative stability throughout this period, buoyed by moderate oil price gains and Canada's temporary exemption from immediate US tariffs.
In contrast, gold prices have managed to consolidate recent strong gains, reaching a record high on Monday. The precious metal's performance reflects its status as a safe-haven asset amid growing market uncertainties.
As the week progresses, market participants will carefully monitor labor market data from the United States. The anticipated job openings figure of 8 million in December could offer crucial insights into the health of the labor market and influence future monetary policy decisions by the Federal Reserve.