21/01/2025 - 08:17 UTCThe US dollar fell sharply against most major currencies on Monday, with the dollar index (USDX) down by 1.18%, reaching two-week lows, following Donald Trump's presidential inauguration where he reiterated that the United States could impose tariffs on Canada and Mexico in the near future, challenging suggestions his policies would be more gradual. However, Trump gave no specific plans on tariffs and officials signalled any new taxes would be imposed in a "measured" way, a major relief for trade-exposed currencies.
Markets are watching closely on developments regarding the U.S. trade deficit with the European Union, a significant point of focus, and the potential use of tariffs or increased energy exports to address it is a key area of discussion. The reversal of the electric vehicle mandate by Trump is also likely to have a substantial impact on the automotive industry, particularly European carmakers who have been investing heavily in electric vehicle technology.
On another note, President Donald Trump signed an executive order on Monday seeking to delay by 75 days the enforcement of a ban of popular short-video app TikTok that was to be banned on Jan. 19. While signing the order, he suggested the United States government should be a half owner of TikTok's U.S. business in return for keeping the app alive and warned that he could impose tariffs on China if Beijing failed to approve a U.S. deal with TikTok.
A reaction from Wall Street is yet to be seen as markets were closed due to the Martin Luther King holiday, however, stock markets in Asia appear to be trading sideways. Market participants are anticipating the release of key earnings reports this week, with notable companies such as Netflix, United Airlines, Johnson & Johnson, Procter & Gamble, Verizon, and American Express scheduled to report their financial results.
For Tuesday markets will most likely be focusing on the German ZEW Economic Sentiment, Canada’s CPI data and earnings reports from Netflix and United Airlines Holdings. For the week ahead markets attention could turn to the U.S. Flash Manufacturing and Flash Services PMIs, the University of Michigan revised consumer sentiment survey and U.S. jobless claims and existing home sales.
The EUR/USD pair surged toward the 1.0400 on Monday, driven by a significant decline in the safe-haven appeal of the US Dollar (USD). This downturn followed a Wall Street Journal report indicating that a presidential memo from US President-elect Donald Trump does not include the immediate imposition of tariffs.
The US Dollar was already under pressure following a Bloomberg report suggesting that Trump might declare a national emergency shortly after taking office. Adding to the market dynamics, Fox News Digital reported that Trump plans to sign over 200 executive orders on his first day in office. These actions may include policies on immigration controls, tax cuts, and heightened import tariffs.
While these measures are anticipated to support US economic growth and drive inflationary pressures, they could ultimately bolster the US Dollar by providing the Federal Reserve (Fed) with justification to maintain higher interest rates for an extended period.
Gold prices rose moderately on Monday in thin trading conditions following Donald Trump’s inauguration as the 47th President of the United States.
In his inaugural address, President Trump declared a national emergency on energy and at the southern border, targeting significant policy overhauls. Meanwhile, his immigration policies propose the deportation of millions of individuals classified as “criminal aliens” to their countries of origin.
Looking ahead, the US economic calendar for the week includes key data releases such as Initial Jobless Claims, S&P Global Flash PMIs, and housing market statistics.
Oil prices edged lower on Monday after Donald Trump was sworn in for his second term as President of the United States. Trump announced plans to declare a national energy emergency, pledging to fill strategic reserves and expand American energy exports worldwide.
A Trump administration official declined to provide specifics about the national emergency declaration but hinted at plans to expedite oil, gas, and electricity projects typically delayed by lengthy permitting processes.
Tensions in the Middle East also showed signs of easing, exerting downward pressure on oil prices.
U.S. stock index futures traded higher on Monday following President Donald Trump’s inauguration and the announcement of a series of executive orders. Investors are also gearing up for a busy week of major corporate earnings reports.
With U.S. stock markets closed earlier in the day for the Martin Luther King Jr. Day holiday, futures showed gains across the board.
This week, investor attention will also turn to quarterly earnings reports from major U.S. corporations, offering insights into business performance and prospects.
The week’s earnings season kicks off with Netflix Inc., which will report its fourth-quarter results on Tuesday.
As investors digest Trump’s early policy moves and analyze corporate earnings, the week ahead promises a blend of market-moving developments.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
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