Today market outlook

[Zerologic]

Trump's tariff concerns are the reason for the strengthening of the Swiss franc

The USD/CHF pair yesterday drew a bearish candlestick with a long body and a shadow at the bottom of the candle. Price formed a high of 0.90728, a low of 0.89651, close at 0.90146. USDCHF moved to the downside breaking lower band line and bounced near MA 50.

The dollar index (DXY) fell drawing a bearish indecision candle with a small body with shadows on the top and bottom of the candle falling from 107,810 to a low of 106,969 closing 107,328. Traders assess this as the impact of US President Donald Trump's tariff plans at the start of the week,

US President Donald Trump on Sunday imposed sweeping countermeasures against Colombia, including tariffs and sanctions, after the South American country refused to allow two military planes carrying deported migrants to land. On the other hand, the prospect of high tariffs on goods from countries including China, Canada, Mexico and the Eurozone has sparked concerns about inflation,

On the Swiss side, a very dovish monetary policy could weigh on the CHF. SNB Chairman Martin Schlegel said the SNB doesn't like negative interest rates but if it has to do it it will do it.

On the other hand, tensions, geopolitical risks in the Middle East and the Russia-Ukraine conflict could increase safe-haven demand, which benefits CHF.

Today's news is one of the focuses of SNB investors Chairman Schlegel Speaks in interview conducted by Swiss TV. Meanwhile, on the USD side, we are waiting for CB Consumer Confidence news which is expected to rise to 105.7 from the previous 104.7.

 

[Zerologic]

Ahead of Japan Monetary Policy Meeting Minutes Japanese Yen limits strengthening

Yesterday the USDJPY pair drew a bullish candle with a long body small shadow on the top of the candle. Price formed a high of 155,976, a low of 154,434, closing at 155,492. The Japanese Yen strengthened and brought the USDJPY pair down to a low of 153,713 on previous days.

The Japanese yen weakened due to concerns that Trump's tariff policy had benefited the US dollar. Trump said he would soon impose tariffs on pharmaceutical, computer chip and metal manufacturers in the near future. This policy has revived fears of a trade war that could affect global growth. Trump's tariff policy is also seen to spur inflationary pressures in the US and trigger US Treasury yields and help the US dollar recover from its lowest level in more than a month. Trump previously ordered his administration to impose emergency tariffs of 25% on Colombian imports, although the tariffs were postponed after Colombia agreed to accept all illegal migrants returned from the US without restrictions.

The dollar index (DXY) is now 107.9195 after tumbling to a low of 106.969. The dollar index is used to measure the strengthening of the US dollar against six major currencies and this can provide an idea of the USD's position in the financial market.

Today we are waiting for the Japanese economic schedule in the Monetary Policy Meeting Minutes. However, rumors circulating seem to suggest that the different policy expectations of the BoJ and the Fed could limit JPY losses and limit USD. The BOJ will continue to raise policy rates and adjust the level of monetary accommodation if the outlook presented at its January meeting materializes. On the other hand, the Fed is expected to leave interest rates unchanged at the FOMC meeting tomorrow.

 

[Zerologic]

EUR/USD hovers near MA 50 as the Fed keeps interest rates unchanged

Yesterday the EURUSD pair drew a bearish candlestick with a slightly long wick at the bottom of the candle. Price formed a high of 1.04437, a low of 1.03823, a close of 1.04208.

The Fed kept interest rates unchanged at 4.50% as widely anticipated. The dollar index (DXY) experienced a slightly moderate increase from a low of 107.749 to a high of 108.295 but closed at 107.945.

Speculation about Trump Tariffs is still in the spotlight in financial markets, Although the delay in enacting Eurozone tariffs provides some short-term relief for the Euro, ongoing uncertainty continues to cloud the currency's outlook.

The Fed appears to be starting to have doubts about the progress of the inflation target towards 2%, instead, officials described high inflation pressures as signaling caution to see more evidence of cooling inflation.

On the other hand, the ECB is expected to cut interest rates further at today's meeting while remaining cautious to avoid exceeding the 2% inflation target or worsening the economic slowdown in the Eurozone. Germany's economic problems and broader political uncertainty remain significant headwinds.

Trump's protectionist policies are expected to shift the balance and cast a shadow over the Euro's outlook, if such tariffs push US inflation higher could potentially hawk the Fed's stance on interest rates.

Today investors will focus on the release of economic data in the Euro area Main Refinancing Rate which is expected to fall from 3.15% to 2.90%. Meanwhile, the US will release GDP and Unemployment Claims data.

 

[Zerologic]

USD/CAD extends gains on Trump tariffs spotlight.

Yesterday the USDCAD pair drew a bullish candle with a long shadow on the top candle indicating a strong up accompanied by strong selling pressure. Price formed a high of 1.45947, a low of 1.43925, and a close of 1.44756 on FXOpen. Rising prices have made the Bollinger bands expand, indicating increased high volatility.

President Trump has reiterated his intention to impose 25% tariffs on Canada and Mexico. He said the announcement would be made for various reasons, including the fentanyl issue, which caused shares of US automakers to decline. He also stated that the first tariffs for Canada and Mexico would take effect this Saturday. He hinted at a possible decision on oil and touched on the country's wood supply.

Trump's tariffs are considered to have a significant impact on trade between the US, Canada and Mexico.

US GDP yesterday was lower than previously in the fourth quarter, actual data showed 2.3% lower than expectations of 2.90% from the previous revision of 3.1%. Meanwhile, US Unemployment Claims fell 207k lower than expectations of 224k and the previous revision of 223k.

Today Canada will release GDP which is predicted to fall -0.1% from the previous 0.3%. Investors will also focus on US Core PCE Price Index data, which is the Fed's most preferred inflation indicator. It is estimated that PCE will rise 0.2% from the previous 0.1%. The US will also release Employment Cost Index data which is expected to rise 0.9% from the previous 0.8%.

 

[Zerologic]

Trump's tariffs overshadow the market, USD strengthens CNH weakens

The USDCNH pair at weekend trading drew a bullish candle with a long body and shadows on the top and bottom of the candle. Price formed a high of 7.3304 and a low of 7.2750 closing at 7.3204 on the FXOpen platform. The bullish candle extended previous gains after the pair hit a low of 7.2342 on January 24.

It seems that Trump's tariffs are still in the spotlight in financial markets. President Donald Trump's protectionist policies have worried international trade. Canada and Mexico are subject to a 25% tariff, which has caused the CAD and MXN currencies to weaken against the USD. On the other hand, China is subject to tariffs of 10%, although this is much lower than when the Trump campaign threatened to impose tariffs of up to 60%. However, Trump's policies have weakened CNH. Trump's tariffs are expected to take effect on Tuesday, February 4, although economists generally oppose the policy on the grounds that the tariffs could result in higher prices for domestic consumers.

The Fed at its final meeting in January finally kept interest rates unchanged as expected, the Fed maintained interest rates at 4.50%. Meanwhile, China's interest rate is currently 3.10% from the previous 3.35% and has experienced a downward trend in 2024. The dollar index (DXY) has risen since January 27 from a low level of 106.969 to now at 108.921. The dollar index is used to track the US dollar against six major currencies. According to the CME group's Fedwatch tool, the Fed is expected to have unchanged interest rates at its March meeting with a probability of up to 82.5%.

Today's Chinese Bank Holiday in observance of the Spring Festival may slightly influence Asian markets. On the other hand, investors will focus on US economic data which will be released today, the US PMI is predicted not to change much compared to the previous revision.

 

[Zerologic]

The safe-haven asset gold surged amid concerns about Trump's tariffs

Gold fell as low as $2772 due to the strengthening of the USD after Trump imposed import tariffs on Canada and Mexico by 25% and China by 10%. Yesterday the price formed a bullish candle with a long body and shadows on the top and bottom of the candle. Gold price formed a high of $2830 and a low of $2772 closing at $2814.

Trump announced 25% tariffs on Mexico and Canada as well as 10% duties on Chinese imports on Saturday while anticipating that he would also target the European Union (EU) and Britain, fueling concerns about a trade war that would disrupt global supply chains. Affected country authorities responded with varying details.

Canadian Prime Minister Justin Trudeau reluctantly announced that Ottawa would retaliate with 25 percent tariffs on $155 billion worth of US imports. Mexican President Claudia Sheinbaum on Saturday ordered retaliatory tariffs in response to tariffs on all goods originating from Mexico. The Chinese government has criticized the tariffs and Trump's demand that Beijing stop the flow of fentanyl, a deadly opioid, to the US, while leaving the door open for talks with the US that could avoid a deeper conflict.

Yesterday the US released PMI economic data showing actual data which was higher than forecast and had a good impact on the USD, today traders will pay attention to Job data which is predicted to be lower than the previous revision.

 

[Zerologic]

NZD/USD fluctuates amid US China trade war concerns

Yesterday the NZDUSD currency pair drew a bullish candle with a rather long wick at the bottom of the candle. NZDUSD price movements fluctuate between the upper and lower band lines with moderate volatility. Price formed a high 0.56547 low 0.55817 closing 0.56489 on FXOpen platform crosses middle band from downside.

During the European session on Tuesday trading the NZDUSD pair faced volatility as risk-off sentiment increased by US-China trade tensions. China countered new US tariffs of 10% that went into effect on Tuesday by imposing its own tariffs: a 15% tax on US imports of coal and liquefied natural gas (LNG), along with an additional 10% on crude oil, agricultural equipment and some car.

China's Ministry of Commerce will also control exports of tungsten, tellurium, ruthenium, molybdenum and related products under the pretext of protecting national security interests.

On the other hand, Chinese exporters are trying to avoid US tariffs by moving production by considering relocating to the Middle East and other regions.

Yesterday's US JOLTS Job data was released with figures much lower than expected, weighing on the US dollar somewhat. Actual data shows 7.60M smaller than expected 8.01M from the previous revision of 8.16M.

Meanwhile, the Reserve Bank of New Zealand (RBNZ) is expected to reduce interest rates by 50 bp to 3.75% this month and a potential reduction in the benchmark interest rate of 3.0% within a year.

Canada's Employment Change in this quarter showed data of -0.1% from the expected -0.2% and previous revision of -0.6%. Meanwhile, the Unemployment Rate was 5.1% as estimated at 5.1% from the previous revision of 4.8%.

The market is expected to continue fluctuating due to Trump's policies, which have a widespread impact on global markets.