The US Dollar is experiencing a positive shift in risk sentiment as markets react to recent developments involving tariffs and cryptocurrencies. In a move that is expected to dominate this week's news, US President Donald Trump announced a one-month delay on tariffs targeting Canada and Mexico. Additionally, the cryptocurrency market has seen a notable recovery, with Bitcoin, Ethereum, XRP, and Solana all experiencing a surge in value following an agreement between Mexico's President Claudia Sheinbaum and President Trump to pause US-Mexico tariffs. Meanwhile, the Bank of England (BoE) and the buildup to the Non-Farm Payrolls (NFP) are capturing market attention.
The delay in tariffs on Canada and Mexico has provided a temporary reprieve for traders and investors, contributing to the improved risk sentiment surrounding the US Dollar. However, tariffs on China are set to take effect later in the session, potentially capping the upside for the US Dollar. The Australian Dollar is feeling the pressure from these Chinese tariffs, compounded by aggressive rate cut bets from the Reserve Bank of Australia (RBA).
While gold has paused its record rally at $2,831 per ounce, it remains steady above $2,800. Resurgent demand for the US Dollar and an overall risk-recovery in the markets are keeping gold buyers vigilant. The precious metal is taking a breather as traders assess the implications of the ongoing trade tensions and their impact on global markets.
In the Asian session, the US Dollar is rebounding strongly towards 155.50 against the Japanese Yen. This movement is attributed to the improved risk appetite, although the Australian Dollar continues to be weighed down by both the tariffs on China and expectations of further rate cuts by the RBA. As markets digest these developments, it remains to be seen how the interplay between US-China trade relations and monetary policy expectations will shape currency movements in the days ahead.
The cryptocurrency market has been buoyed by the agreement between President Trump and President Sheinbaum, which has led to a significant uptick in digital currency values. Bitcoin, Ethereum, XRP, and Solana have all benefited from this positive news, highlighting the resilience of cryptocurrencies in volatile market conditions.