Concerns over an escalating trade war could lead to a significant economic slowdown in the United States this year. As tensions rise, the possibility of further interest rate cuts by the Federal Reserve looms large. These fears have already impacted the financial markets, with the US dollar (USD) falling to a nearly four-month low. Meanwhile, some cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), and XRP, experienced small gains as traders adopted a cautious approach.
The crypto market has been marked by increased volatility, prompting traders to maintain a risk-averse stance. Despite this environment, Aave (AAVE) showed a notable rally on Wednesday as the market began to recover from a severe downturn earlier in the week. In anticipation of the White House Crypto Summit scheduled for Friday, market participants remain vigilant about potential regulatory discussions that could further influence crypto dynamics.
In the foreign exchange market, the Australian dollar (AUD) held its ground against the USD, remaining near its weekly high. This stability comes amid reports that Australia's trade surplus exceeded expectations in January. Conversely, the USD/JPY pair attracted some buying interest during the Asian session on Thursday yet remained close to a multi-month low reached earlier in the week. The Japanese yen (JPY) may continue to find support from bets on a Bank of Japan rate hike and ongoing trade war concerns, which could restrain further gains in the currency pair.
Softer US macroeconomic data has also contributed to expectations of additional policy easing by the Federal Reserve. This sentiment has pressured the USD and provided a boost to gold prices, as investors seek safe-haven assets amidst uncertainty.