President Donald Trump has confirmed the imposition of 25% tariffs on Canada and Mexico, effective March 4. This announcement comes alongside an additional 10% levy on Chinese imports, which will stack on top of a previous 10% tariff imposed in February. These trade measures are expected to influence global markets as they respond to shifting geopolitical dynamics and economic uncertainties.
In European trading on Friday, the EUR/USD pair hovered near 1.0400, reflecting market reactions to the latest German economic data releases. Both German Retail Sales and Import Prices data were unveiled, though they failed to bolster the Euro. Investors are keenly analyzing these reports for indications of inflationary trends, as persistent inflation could reaffirm the Federal Reserve's cautious stance on policy easing.
In light of the current economic landscape, gold is losing its status as a tariff safe haven, while US yields continue to decline. Market participants anticipate the forthcoming release of the US Bureau of Economic Analysis' PCE Price Index data for January. This index, regarded as the Federal Reserve's preferred measure of inflation, is expected to provide further insights into the inflationary environment.
As investors await detailed German and US inflation data, increased haven demand for the US Dollar is exerting pressure on the EUR/USD pair. The ongoing tariff announcements and geopolitical concerns are contributing to this trend, underscoring the complex interplay between economic policies and market behavior.