It was the busiest day on Thursday for the foreign exchange market. For the American session, EUR/USD and GBP/USD both had bullish trading results. The EUR/USD currency pair kept to the vicinity of 1.0800, whereas the GBP/USD pair kept its positive bias, staying around the 1.2950 area. The US Dollar fell hard after today’s unexpected, large-scale ‘shock and awe’ policy move from the United States. All of these things happened in this very tense financial environment.
Late Wednesday, US President Donald Trump moved to implement his own auto imports by signing a proclamation that imposes a 25% tariff on particular auto imports. That decision renewed fears of a U.S. economic downturn, as new tariff threats appeared. Beyond the FOMC announcement, the US Dollar has faltered to find any demand, setting the tone for many currency movements within the market.
The Dollar’s continuing weakening was the third critical factor in how the currency pairs traded out. The EUR/USD too managed to maintain its advance, supported by that ongoing US Dollar weakness. In much the same way, the GBP/USD pair’s bullish trend had no reason to stop in the aftermath of these events, and thus resumed its upward trend.
Beyond currency pairs, President Trump’s tariff proclamation sent shockwaves through the gold market as well. Demand for precious metals skyrocketed on Thursday, with gold prices rallying back above $3,050 to near all-time highs. The precious metal’s upward momentum was largely driven by the President’s announcement and the subsequent depreciation of the US Dollar.
Today’s market reaction is indicative of the deep concern among investors about bad auto product specific news and what it could mean. As uncertainty reigned, and traders began to flock toward safe-haven assets, gold became one of the main beneficiaries, pushing its price to historic highs.