The latest developments in US economic policy and market trends have captured widespread attention. Former President Donald Trump has announced plans to use tariffs as a measure to bolster the US economy and protect American producers. The economic agenda, which is starting to take shape, prioritizes tariffs on imports from Mexico, China, and Canada. Meanwhile, critical economic data, including US Retail Sales and Industrial Production figures for January, are slated for release this week. The forex market has witnessed notable fluctuations, with the US Dollar showing mixed performance against major currencies.
A significant focus of Trump's tariff strategy is on three countries: Mexico, China, and Canada. These nations represented 42% of the total US imports in 2024, underscoring their importance in the trade dynamics of the United States. According to the US Census Bureau, Mexico emerged as the top exporter to the US with a staggering $466.6 billion in exports, highlighting its critical role in US trade relationships. Trump's tariff plans have sparked concerns and discussions across various economic sectors.
In the currency markets, the US Dollar experienced varied performance against major currencies throughout the week. The British Pound (GBP) emerged as a strong contender against the USD, benefiting from an improving risk mood. This resulted in the GBP/USD pair rising to its highest level in over a month. Despite these currency fluctuations, major equity indexes in the US concluded the day with decisive gains. The USD Index saw a decline of over 0.8%, reflecting broader market sentiment.
Gold prices continued an upward trend, with the precious metal rising more than 0.8% on Thursday. The decline in US bond yields across the curve contributed to this increase. The benchmark 10-year US Treasury bond yield experienced a sharp decline, influenced by recent headlines surrounding Trump's tariff policy. The growing concerns about these tariff plans have provided additional support for gold as investors seek safe-haven assets amidst uncertainties.
On the economic front, Eurostat is set to release preliminary Employment Change and Gross Domestic Product (GDP) data for the fourth quarter. These figures are anticipated to provide valuable insights into the economic health of the Eurozone. Investors and analysts will closely monitor these releases for indications of economic stability and growth prospects.
The upcoming release of US Retail Sales and Industrial Production data for January will also be pivotal in assessing the state of the US economy. These reports are expected to offer key insights into consumer spending patterns and industrial activity, providing a comprehensive view of economic performance at the start of the year.
The combination of evolving economic policies and upcoming data releases has created a dynamic environment in financial markets. Investors remain vigilant as they navigate through these developments, seeking opportunities and managing risks associated with changing economic landscapes.