03/02/2025 - 08:24 UTCThe US dollar gained against most major currencies early on Monday, with the dollar index (USDX) up by more than 1% from Friday’s closing after U.S. President Donald Trump delivered on his threat of more trade tariffs on Canada, Mexico, and China. Inflation data released on Friday provided an additional boost to the dollar, as the PCE price index data rose as expected, reaching above the Fed’s 2% annual target. This also factored into expectations that U.S. interest rates will remain high for longer.
Worries of a wide-ranging trade war and its potential to hinder global economic growth sent Asian stock markets tumbling on Monday, with European and U.S. equity futures also signaling significant declines. The negative market reaction follows the recent imposition of tariffs by the US on Canada, Mexico, and China. The U.S. imposed tariffs this weekend, placing a 25% duty on goods from Canada and Mexico, and a 10% levy on Chinese imports. The stated justification for these tariffs was the need to address the flow of migrants and fentanyl into the United States.
Oil prices rose early on Monday, with WTI up by more than 1.2% and Brent gaining around 0.3% from Friday’s close as the newly imposed tariffs by the US raised fears of crude supply disruption from the two biggest suppliers to the U.S., but the prospect of lower fuel demand limited gains.
Leading cryptocurrencies Bitcoin and Ethereum took a tumble during Monday's Asian trading session. Bitcoin's value plummeted to $91,217 thousand, while Ethereum dropped to $2,146. Both managed to recover a small part of these losses, but this downturn reflects a wider slump in cryptocurrency prices. This decline coincides with a decrease in risk appetite following the imposition of trade tariffs.
For the week ahead, the focus could turn to ISM Manufacturing PMI, BOE Interest Rates, Non-Farm Payrolls, JOLTS Job Openings, Preliminary UoM Consumer Sentiment and Inflation expectations. On the earnings front, investors are eagerly awaiting the quarterly report of Palantir.
The EUR/USD pair remained under pressure as the US Dollar (USD) continues to strengthen. The Greenback's safe-haven appeal has been reinforced following comments from former US President Donald Trump, who reiterated his stance on imposing steep tariffs on North American trade partners and BRICS nations.
Meanwhile, the latest US core Personal Consumption Expenditure (PCE) Price Index data for December met expectations. The core PCE inflation—considered the Fed’s preferred inflation gauge—rose by 0.2% month-on-month, in line with forecasts and up from 0.1% in November. On a year-over-year basis, core PCE inflation remained steady at 2.8%, matching both estimates and the previous reading.
Gold prices remained near all-time highs on Friday as market sentiment turned risk-averse following a clarification from the White House regarding US tariff policy.
US Press Secretary Karoline Leavitt emphasized that a 25% tariff on imports from Canada and Mexico will be enacted on February 1, dismissing earlier reports as incorrect. Additionally, she confirmed that Washington will impose a 10% duty on goods imported from China.
Following this announcement, the US Dollar strengthened, causing gold to pare some of its earlier gains above $2,800. A failure to secure a daily close above this level may prompt investors to book profits ahead of next week’s US Nonfarm Payrolls (NFP) report.
Oil prices posted losses for a second consecutive week due to the impact of trade tariffs under former U.S. President Donald Trump.
Trump reaffirmed on Thursday his intention to impose 25% tariffs on imports from Canada and Mexico. Canada is the largest supplier of oil to the U.S., accounting for 60% of total imports, while Mexico contributes another 10%. If oil imports were subjected to tariffs, U.S. gasoline prices could surge, especially since ramping up domestic production—one of Trump’s policy priorities—would take time to materialize.
Meanwhile, investors are also looking ahead to the upcoming OPEC+ meeting on February 3. Kazakhstan's Energy Minister revealed on Wednesday that OPEC+ is set to discuss Trump’s plans to boost U.S. oil production and will seek to establish a unified stance on the matter.
The US 500 closed lower on Friday in a sharp reversal after the White House confirmed that tariffs on Mexico, Canada, and China would take effect on Saturday.
The Personal Consumption Expenditures (PCE) Price Index—the Federal Reserve’s preferred inflation gauge—rose 0.3% month-over-month in December, up from 0.1% in November. On an annual basis, inflation accelerated to 2.6%, compared to 2.4% the previous month.
The core PCE reading, which strips out volatile food and energy prices, increased 0.2% month-over-month and remained steady at 2.8% year-over-year.
The corporate earnings season continued, with several major firms reporting results.
Apple stock closed lower after giving up earlier gains, despite the company forecasting low- to mid-single-digit revenue growth in its fiscal second quarter.
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