The financial markets are facing a challenging start to the week, as risk aversion grips investors worldwide. On Monday, concerns over a global trade war are intensifying, fueled primarily by US President Trump's tariffs on Canada, Mexico, and China. These developments have markedly affected various assets, including gold and major currency pairs.
Gold, traditionally a safe haven, is experiencing a pullback from its record highs amidst this climate of uncertainty. Early Monday, the precious metal was trading modestly in the red, below $2,800. The diminished appeal of gold can be partly attributed to resurgent demand for the US Dollar, which is currently acting as the preferred safe haven for investors wary of the escalating trade tensions.
The EUR/USD pair has not been spared from the market's volatility. It has attracted heavy follow-through selling, diving to the 1.0200 neighborhood—a three-week low. Spot prices for the euro have moved closer to a two-year low that was last touched in January. This movement reflects broader market apprehensions regarding the potential economic fallout from the ongoing trade disputes.
Similarly, the AUD/USD pair is under pressure. It remains heavy and is eyeing the 0.6100 level in the Asian trading session on Monday. The Australian dollar's weakness further highlights the pervasive risk aversion sentiment, as investors seek refuge in more stable currencies amid the global economic uncertainty.