The foreign exchange market was not only active, but extremely volatile this week, perhaps no more so than the EUR/USD currency pair which almost a 12-month high. The pair jumped as high as 1.1146 on Wednesday, its strongest level since September of 2024. The week ended with the EUR/USD ultimately closing near the 1.1000 threshold. This movement is a stark reminder of the volatility that persists in this time of global economic uncertainties.
Market participants in U.S. dollar futures and option markets are on edge. They anxiously await every bit of data that comes out from the U.S. Consumer Price Index (CPI). This prospect arrives amid historic global trade tsunami, further roiled by the recent wave created by U.S. trade policy.
President Donald Trump recently released his plan for reciprocal tariffs, a shocking move that has already sent investors into a worldwide panic. The announcement sparked fears about increasing trade friction, which could have profound long-term effects for international markets. Faced with escalating geopolitical risk and market uncertainty, gold prices immediately skyrocketed. During that time, they hit an all-time high of $3,167 as investors rushed to safe-haven assets. Yet instead, gold had a mild correction taking this back under $1,900, staging a deep correction heading into the weekend.
Meanwhile, as the market digests the latest tariff headlines, investor sentiment is still on edge. All of us are eagerly anticipating seeing how these developments play through to U.S. inflation data. The impact of tariffs on prices can be substantial. Therefore, the upcoming CPI data will likely be pivotal in establishing or recalibrating market expectations and setting the tone for future trading.
Reserve Bank of New Zealand (RBNZ) to lower their cash rate 25 bps. This announcement comes amidst a flurry of positive developments for a greener U.S. Some analysts are already calling for the RBNZ to stay dovish for longer. Such a move would go a long way toward leveling the currency playing-field throughout the Asia-Pacific.
The Australian dollar hasn’t been sheltered from these global trends. The AUD/USD pair tumbled to near 0.5985 for the first time since the COVID-19 pandemic, reflecting broader market pressures and investor sentiment influenced by U.S. trade policies.