US President Donald Trump has announced a delay in the implementation of tariffs on Canada and Mexico, granting a one-month respite to these trading partners. This decision comes amid a period of significant economic developments, including Trump's signing of an executive order on Monday for the establishment of a sovereign wealth fund aimed at bolstering the US economy. Notably, experts in the cryptocurrency sector suggest that Bitcoin could be a component of this fund.
Attention within financial markets is now turning toward upcoming US labor data and Federal Reserve policymakers' speeches. These events gain heightened significance as the tariff delay provides temporary relief. Meanwhile, tariffs on China are set to take effect shortly, which could potentially impact various financial instruments, including USD/JPY, which rebounded but remained below 155.50 during Tuesday's Asian session.
Gold prices have retreated from record highs but are consolidating above $2,800 early Tuesday. The market closely watches for a sustained move above the all-time high of $2,831 to target the psychological level of $2,850. The 14-day Relative Strength Index (RSI) has entered an overbought region, suggesting caution among traders as it trades near 71.
President Trump's executive order detailing the creation of a sovereign wealth fund represents a bold step to develop the US economy. This fund could potentially include Bitcoin, reflecting the growing interest and acceptance of cryptocurrency in mainstream financial strategies. The sovereign wealth fund aims to leverage strategic investments to support economic growth and stability.
In parallel, markets are also reacting to aggressive rate cut bets from the Reserve Bank of Australia (RBA). These bets weigh heavily on the Australian dollar, adding another layer of complexity to the current economic landscape. Meanwhile, the US JOLTS Job Openings data is anticipated to reveal 8 million openings in December, providing further insights into the labor market's health.
The Federal Reserve policymakers' speeches will be pivotal for market participants seeking clues on future monetary policy directions. Atlanta Fed President Raphael Bostic emphasized the need for caution amid growing uncertainty.
"Uncertainty has been increasing; want to be cautious and not have policy lean in a direction and have to switch." – Atlanta Fed President Raphael Bostic
This cautionary stance reflects the delicate balancing act faced by policymakers as they navigate economic challenges while striving to maintain stability.
The tariffs on China commencing later this session introduce an additional variable that could cap potential upside movement in currency pairs such as USD/JPY. As markets brace for these tariffs' impacts, gold remains a focal point, with traders eyeing critical price levels for further cues.
The 21-day Simple Moving Average (SMA) is viewed as the last line of defense for gold buyers at $2,731. A breach below this level could signal potential downside risks, underscoring the importance of technical indicators in guiding trading strategies.
Amid these developments, the Fedspeak will be closely monitored. Market participants will seek insights from Federal Reserve policymakers regarding interest rates and economic outlooks. Raphael Bostic's recent comments further illustrate this dynamic.
"I'm prepared to wait for a while to cut again," – Atlanta Fed President Raphael Bostic
Such remarks highlight the careful consideration being given to monetary policy adjustments in response to evolving economic conditions.