The AUD/USD pair has stabilized after hitting a multi-year low, amid ongoing global trade tensions. This recovery comes as the United States and China engage in negotiations to resolve their contentious trade dispute. Meanwhile, President Trump has issued a threat to impose tariffs on the European Union, a significant trading partner of the US. This move follows existing tariffs on Canada, Mexico, Colombia, and Panama, with a temporary delay for Canada and Mexico set to expire in a month.
The financial markets have reacted to these developments with a notable shift towards safe-haven assets like gold. The US administration has signaled intentions to pursue a universal tariff strategy, alongside more targeted tariffs on China. The EU appears to be next on the list of tariff targets, raising concerns about further disruptions in international trade relations. Analysts suggest that the US holds less leverage over China compared to the earlier stages of the trade war, potentially complicating negotiations.
“Escalate to negotiate” tactics are still the preferred course of action for President Trump.
This approach has led to speculation that "tariff fatigue" could emerge, reducing support for the US dollar over time. Nevertheless, the dollar is expected to remain robust in the near term due to the ongoing uncertainty and tariff policies. Market makers play a crucial role in this environment, with over 500 firms operating as NASDAQ Market Makers to ensure orderly securities markets. These entities hold exclusive franchises, maintaining stability amidst fluctuating economic conditions.
Freeriding remains strictly prohibited in financial markets. This practice involves buying securities at low prices and selling them high without paying for the initial purchase, posing risks to market integrity. The prohibition of freeriding underscores the importance of maintaining fair and transparent trading practices.
The US and China continue their discussions aimed at easing trade tensions, while President Trump's recent tariff threats against the EU add another layer of complexity to the global economic landscape. As trade negotiations unfold, market participants remain vigilant, monitoring developments that could impact currency values and broader economic stability.