Ever since US President Donald Trump took office, he has reordered tariff changes. Together, these changes have cumulatively increased the trade-weighted average tariff rate on all US imports by about 5.5-6.0 percentage points. This decision has doubled tariffs overnight. They are now almost at peacetime levels last seen since the end of the Second World War. These changes have already raised concerns and the move is likely to further increase market uncertainty and a risk-off sentiment among traders.
Since then, the overall risk sentiment has been a little shaken from concern over Trump’s auto tariffs announcement made earlier in the week. Traders fleeing uncertainty are finding haven in gold. Consequently, gold has skyrocketed to a new all-time high, nearing $3,100. Earlier this week, our friends at The Kobeissi Letter tweeted on X and warned. While markets may perceive the April 2 tariffs as marking the “end of uncertainty,” they write, a more volatile period lies ahead.
Early on Friday, the EUR/USD pair continues to find it difficult below the 1.0800 mark. It was unable to capitalize on the favorable momentum from the day before. While all eyes at market are focused on the February US Personal Consumption Expenditures (PCE) Price Index, investors are eager to dig into the data and see if the Federal Reserve’s continued dovishness on policy easing is warranted.
These positive developments take place amid growing market pressure. Trump’s tariff policies only increase this uncertainty. These tariffs are likely to have sweeping effects that will upset market dynamics both at home and abroad. As traders face a new world of turmoil, they’re no doubt fleeing to gold as that go-to safe-haven.
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