US President Donald Trump takes credit for a big change. He has been more and more vocal about relaxing some of the most harmful tariff measures on China, causing widespread exuberance on Wall Street. When Trump announced the delay in tariffs, stock markets exploded, as risk-loving investors poured into markets displaying an optimistic risk sentiment. This development suggests that the US leadership may be beginning to understand the complexities of the ongoing trade relationship with China.
The announcement comes as the Biden administration faces increased scrutiny on their US-China trade updates, still monopolizing financial headlines. The US government is finally waking up to the new landscape and adding to its list of goods exempt from China’s retaliatory tariffs. Nonetheless, this exemption is a stopgap and very soon certain products will be facing tariffs on a sectoral basis. Frankfurt-based Commerzbank’s FX analyst Thu Lan Nguyen noted that the new tariffs would be less onerous than previously proposed. This cut is particularly acute when it comes to China.
Market analysts create make much of persistent US Dollar weakness. This is a positive sign for currency pairs in the long run. The EUR/USD has managed to hold onto most of its recovery gains, consolidating just below 1.1400 in early European trading on Monday. At the same time, the GBP/USD maintains strong positive pressure above 1.3150 in the Asian hatch.
To close our coverage of Jackson Hole, we focus ahead on the next round of communications from Federal Reserve officials, commonly referred to as “Fedspeak.” With Good Friday holiday approaching, we’re monitoring closely the continuing evolving ECB action. These changes should help to ensure that the markets remain focused on what should be a very improved and responsive change in Treasury’s monetary policy.
“Nobody is off the hook.” – US President Donald Trump
While the market cheered the news of a concession on Trump’s behalf with tariffs, analysts are warning that this is a still developing story. Whether it is pushing investors into riskier assets or something else, it has not been supportive for the US Dollar either. That proves that traders are remaining cautious regarding potential shifts in tariff policy. Just like that, US-China trade headlines will likely keep dominating the market’s movements.
The impact of these tariff revisions is extensive, especially for retail investors. According to recent data, approximately 81.4% of retail investor accounts lose money when trading contracts for difference (CFDs) with certain providers. This alarming statistic puts into context the inherent dangers of trading during volatile market conditions caused by geopolitical events.
While Wall Street champions this progress, the general uncertainty about the future of US-China relations is still in the air. Analysts can’t get enough of the latest goings-on with trade. They intend for these updates to significantly influence competitive market forces and influence investor sentiment in the near future.