US President Donald Trump has done a considerable about face on tariffs. He has raised the trade-weighted average tariff rate on all US imports by some 5.5 to 6.0 percentage points. This dramatic move has reverberated across global trade, causing turmoil among currencies and altering expectations for economic growth. The Australian Dollar has taken a hit as a result of all of these developments, mirroring the USDMX outlook and overall market fears about an escalation of trade tensions.
In particular, traders are preparing for Wednesday’s expected announcement from President Trump regarding the imposition of reciprocal tariffs. Consequently, the EUR/USD currency pair is coming under persistent selling pressure. Indeed, over the course of last week, the USD/CAD pair was remarkably stable, Friday’s close coming in at about 1.0820. The US Dollar encounter some jitters linked to tariffs and disappointing economic data. Consequently, its allure as a safe haven is beginning to hit some walls.
Eurozone inflation data will play a crucial role in shaping European Central Bank (ECB) expectations, as traders closely monitor potential policy shifts. The prospect of an April interest rate cut is still far from decided. This uncertainty has gone on to produce a new layer of complexity to the current economic landscape. At the same time, technical analysts in the market have wave of tariff announcements from the US could increase volatility in gold, or the XAU/USD.
Trump’s tariff measures in response may aim to bring about even more disorder in the global trade landscape. The next US jobs report may show if these tariffs are starting to take a toll on the labor market. This will be especially important and valuable to the economic stakeholders. The Reserve Bank of Australia (RBA) is predicted to hold pat. Here at home, we’ll be keeping an eye out for key releases like Canadian employment numbers and the Bank of Japan’s Tankan survey.