The US dollar maintains its robust position as market participants exercise caution amidst prevailing uncertainties surrounding President Donald Trump's tariff policies. The financial landscape is further complicated by key economic indicators and projections, as well as the evolving global trade dynamics. In the latest developments, President Trump confirmed a 25% tariff on European autos and other items, adding to the market's apprehension. Meanwhile, the price of gold has come under significant selling pressure, influenced by these tariff discussions.
The Federal Reserve's policies remain a focal point for investors. The Fed funds rate, which is the overnight rate at which US banks lend to each other, plays a critical role in this environment. According to the CME Fedwatch Tool, there is currently a 33.0% probability that interest rates will remain unchanged in June. This projection reflects the market's anticipation of steady monetary policy amidst broader economic stability.
Economic data releases are also in the spotlight. The quarterly headline preliminary Personal Consumption Expenditures (PCE) is expected to hold steady at 2.3%, while the core PCE figure is anticipated to remain at 2.5%. These figures are crucial as they provide insights into consumer spending and inflationary trends.
Adding to the economic narrative, the second reading of the US Gross Domestic Product (GDP) for the fourth quarter is scheduled for release at 13:30 GMT. The GDP annualized rate is projected to stay stable at 2.3%, aligning with previous estimates and indicating consistent economic growth.
President Trump's announcement of tariffs has introduced additional complexity to the market.
"Tariffs will go on, not all, but a lot of them," said US President Donald Trump.
He further elaborated that levies on Canadian and Mexican imports are set to take effect on April 2, alongside reciprocal tariffs.
In corporate news, Nvidia's quarterly sales are projected to reach approximately $43 billion, slightly exceeding analysts' expectations. Despite this positive outlook, the company's gross profit margins are expected to be narrower than predicted due to the introduction of a new chip design known as Blackwell.
In the commodities market, gold (XAU/USD) has experienced a decline in support, facing substantial selling pressure. This downward movement was triggered by uncertainties stemming from President Trump's comments during a cabinet meeting on Wednesday, which cast doubt on which levies would apply, when, and to which countries. The potential for a reversal in gold prices hinges on reaching the daily Pivot Point of $2,912.
The financial markets remain vigilant as these multifaceted issues unfold. Investors are closely monitoring developments in US trade policy and economic indicators, seeking clarity amidst a complex global environment.