Trade counteractions are increasing globally. The future course of the United States-China relationship is very much in play and will be vital for global economic and political stability. As a result of these changes, the trade-weighted average tariff rate on all US imports has risen by around 5.5-6.0 percentage points. This upward trend has driven tariff levels up close to their highest height since the Second World War. This is leading to big waves in international markets. Tariff jitters have been a drag on the US Dollar. At the same time, the Japanese Yen is getting stronger, as investors flock to safe-havens with the rising tides of uncertainty.
China’s President Xi Jinping underlined the importance of a stable and healthy US-China relationship. He called attention to the importance of these relationships for maintaining stability around the world. He called for dealings between the two countries to be conducted according to the principles of mutual respect and win-win cooperation.
“Maintaining the stable and healthy development of US-China relations is fundamental.” – China’s President Xi Jinping
“Will handle US-China relations based on the principles of mutual respect and win-win cooperation.” – China’s President Xi Jinping
Recent tariff increases have revived a risk-off sentiment in broader financial markets. Consequently, investors have rushed to safe-haven assets such as gold, which recently hit an all-time high above $3,070. This movement reflects investors’ concerns over the uncertainty surrounding former President Trump’s reciprocal tariffs and their potential impact on global trade dynamics.
In the currency markets, the AUD/USD has broken below 0.6300. This decrease underscores the far-reaching impact of trade tensions on worldwide economies. The USD/JPY has continued selling offense, sticking below 151.00. These adverse trends underscore the larger systemic problems major currencies continue to have in adjusting to an unstable economic environment.
The Bank of Japan’s March Summary of Opinions has further raised the stakes on speculation about increasing rates. This new development continues to play a huge role in driving currency movements. Traders are eagerly watching tomorrow’s US Personal Consumption Expenditures (PCE) Price Index. They intend for it to provide useful information about what we can expect in economic recovery.
With trade tensions escalating around the world, market participants have been flocking to safe-haven assets like gold as a hedge against uncertainty. As a result, investors are demonstrating a strong appetite for these assets. This trend further underscores their risk-averse mood as they continue to navigate an increasingly volatile economic environment.