Wednesday saw only marginal US Dollar strength, with GBPUSD just below 1.2900. This was remarkable even considering the simultaneous release of upbeat employment numbers from the same day. In March, the private sector filled 155,000 new jobs, which is impressive and indicative of strong overall employment growth. The currency failed to capitalize on this positive development. The bottom line in so many places is investors are risk-averse. They’re looking forward to hearing from President Donald Trump on reciprocal tariffs, which should be announced officially later today.
Market sentiment is downbeat as traders continue to digest the likely impact of Trump’s tariff announcements. This anticipation has resulted in an investor hesitancy to commit large positions to the market. The EUR/USD currency pair is still hanging around the 1.0800 area, which can be indicative of some overall currency market hesitance.
As the clock ticks toward the 20:00 GMT announcement, traders are adopting a wait-and-see approach. The new tariffs—which some have inaccurately characterized as ‘reciprocal’—have still fostered a climate of fear and doubt. It has become apparent not only in currency trading, but in commodities as well, with gold prices having a harder time finding consistent direction.
The XAU/USD currency pair, or gold priced in US Dollars, has been trading in a tight range above key support near $3,110. This follows up a sharp correction in gold prices from their record-high close to $3,150 reached on Tuesday. Market participants are closely watching to see how these developments play out and what effect they will have on the precious metal’s price.
From a bigger-picture perspective, the stronger-than-expected employment data was unable to deliver the usual jolt upward for the US Dollar. So even with robust hiring and wage growth, investors are clearly paying more attention to geopolitical events and trade policy than they are to positive economic data. Traders have been on the defensive. Whether on manufacturing components or rolled steel, they would much rather wait to place new bets until they get some certainty on the tariff front.
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