The macro backdrop for markets continues to shift as the US Dollar follows the fortunes of a rebound in risk sentiment. The US Dollar has classically served as a safe-haven asset, calling to investors in times of uncertainty. Recent events have injected some serious gas into the currency’s volatility. At the same time, Gold prices are laying a base for their recent breakout above $3,000 as bullish momentum grows for another upward thrust. It’s understandable market attention is being captured by US tariffs. This unprecedented level of interest is increasing gold’s magnetism as a safe-haven asset during times of uncertainty.
US tariffs have become the all-important bugaboo for markets around the world. This shift comes on the heels of President Donald Trump’s latest threats. These tariffs are set to shake global economies, leaving investors scrambling for a safe-haven asset – such as Gold. Now the market seems to be catching up with these realizations. The hawkish jawboning from the Bank of Japan (BoJ) in recent days has only served to weaken the US Dollar, further complicating an already perplexing economic landscape.
At the same time, the currency markets are undergoing major changes as well. Forex traders absolutely adore the EUR/USD currency pair. They flock to the brokers that offer the tightest spreads, quickest execution and most robust trading platforms. The USD/JPY is recovering back up toward 150.50 in Wednesday’s Asian session. While history teaches us that trading currency is very tumultuous, this movement takes a step further.
As the week goes on, all eyes will be on the new Core Personal Consumption Expenditures (PCE) index. This index is the Federal Reserve’s preferred measure for tracking inflation. This data release later in the week is anticipated to provide further insights into inflationary pressures and monetary policy directions.