The United States Bureau of Economic Analysis is poised to release the Personal Consumption Expenditures (PCE) Price Index data for February this Friday at 12:30 GMT. For the main index, analysts expect a 0.3% mm increase and a 2.7% yy increase. This data release comes at a time when market participants are grappling with the broader implications of recent tariff changes and fluctuating global markets.
The trade-weighted average US tariff rate on all US imports has plummeted. It has increased by an estimated 5.5 to 6.0 percentage points, mostly as a result of former President Donald Trump’s unilateral tariff increases. Together, these changes have taken tariffs to heights unprecedented since the immediate post-Second World War era. According to experts, the re-routing of trade indicated that over time, these tariffs’ long-term effectiveness would gradually fade.
The EUR/USD pair has broken below the 1.0800 psychological level for the first time early Friday. Given the positive momentum seen on Wednesday, this is even more disappointing when considering recently strong performance. The pair is still rangebound as traders look for the key US PCE inflation report. At the same time though, global risk sentiment is under heavy pressure from Trump’s auto tariffs announced earlier this week.
Market participants are flocking to gold as a safe haven, soaring the prices to record highs. Gold has skyrocketed to well above $2,050 all-time highs, closing in on $3,100. As uncertainty in the market continues to rise, investors are pouring into safe-haven, defensive assets. The GBP/USD pair continues to trade around 1.2950 during the European session on Friday. With uncertainties about US tariff plans, that potential gain is in doubt.
Further good news came from February UK Retail Sales, which surprised the market. This adds a boom of exuberance to an otherwise grim market landscape. Soon after the imposition of US tariffs, traders and investors are busy recalibrating their expectations on the ramifications of US tariff policies. Consequently, the overall risk sentiment continues to be shaky in the market.