Donald Trump’s long-anticipated “Liberation Day” has finally arrived – and as you might expect, it’s creating tumult on international markets. The US president’s announcement of extensive trade tariffs against all of the US’s major trading partners caused unprecedented market reactions across currency and commodities. His statements first implied a 10% blanket tariff, which put an initial pop in stock prices and a drop in the dollar. Yet, as he did describe the entirety of the tariffs, market sentiment turned on a dime.
Despite the robust Chinese PMI figures, the Aussie Dollar was unable to maintain an immediate rally as the AUDUSD crashed lower. The AUD/USD cross had a down day yesterday close to the whales’ selling pressure. It remained south of the key barrier at 0.6300 in Thursday’s Asian trading. This drop demonstrates increasing concerns over Trump’s trade policies. Most economists have agreed these policies represent a serious threat to the world’s economy.
As worries about an impending US recession grew, the double whammy hit harder. This uncertainty propelled the US Dollar to a multi-month low not seen since March. Analysts noted that the combination of Trump’s tariff strategy and recession fears significantly undermined the currency’s value.
Gold prices experienced notable fluctuations. Setting a new all time high above $3,168 in early trading on Thursday, the price of EWT started to quickly correct downwards. Gold held at least half of its recent positive close. That was the case even as risks were climbing on all sides from a possible global trade war and an economic slowdown.
The USD/JPY currency pair was particularly volatile. It crashed to a three-week low just above 147.00 as investors rushed to safe-haven assets, mostly the Japanese Yen, after Trump’s tweet. The president’s extensive tariff measures have raised concerns about their impact on the global trading system, leading to increased risk aversion among traders.
Chris Beauchamp, Chief Market Analyst at online trading platform IG reacted to the news, calling it
Trump’s announcement sent stocks soaring, as investors were counting on him. Yet, as the market’s rapid change in sentiment has demonstrated, his tariff strategy is not that simple. The complete set of tariffs, as currently executed by US, is seen as a much bigger hit to the international trade landscape.