And as the US-China trade war continues on, economic ripples are getting wider and deeper. Faced with increasing uncertainties, investors are showing a greater demand for gold to fulfill their need for safe havens. Fears over the deepening trade war continue to mount. The uncertainty caused by US tariffs has many bracing for an impending recession, creating ripples in market conditions and currency values.
The trade war has not only heightened worries about economic stability but has stalled progress in EU-US trade talks. These unresolved tiffs between the two economic superpowers add a layer of complexity to an already tumultuous global trade. This tension has major implications for U.S. foreign relations as well.
Here’s why recent US consumer data are setting off alarms. What analysts really want to see though is the effect tariffs have on the domestic economic activity they’re supposed to encourage. Federal Reserve Chair Jerome Powell’s upcoming speech is anticipated to provide further insights into the central bank’s monetary policy amid these turbulent times. Investors are especially focused on what the Fed will do in response to those pressures created by the trade war.
The EUR/USD pair continues to see strong support in the currency markets. In fact, during European trading on Wednesday it was above 1.1350. The AUD/USD has fallen back from its recent peaks. It continues to take pleasure in a 0.23% gain for the day and trades close to 0.6350 as we speak. This US Dollar is experiencing a fresh wave of liquidity-driven selling. This drop is mainly driven by persistent concerns over the U.S.-China trade war.
The GBP/USD currency pair has made its incredible six-day winning streak stick. It’s now well north of 1.3250, brushing against the highest level since October in the Europe session today. The pair has shown remarkable staying power. That’s incredible, particularly as the annual CPI annual inflation rate has declined to 2.6% in March from 2.8% in February. This suggests that traders are looking more to the macro market for cues than to the domestic inflation picture.
China’s reaction to the rising tensions in the region indicates an intent to talk, not fight. The Foreign Ministry further reiterated that the US must immediately cease its maximum pressure tactics against China. If they truly seek to find solutions through dialogue, this is a necessary first step.
“If US wants to solve issues through dialogue, it should stop exerting maximum pressure,” – China’s Foreign Ministry
With no apparent end to this trade war in sight, both countries are under lots of pressure to meet somewhere in the middle. The doubt hovering around global markets is expected to continue as investors stay risk-averse. The economic data vs. geopolitical development tug-of-war will be the dramatic epicenter of what’ll drive markets going forward.