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07/01/2025 - 08:05 UTCThe U.S. dollar fell against most major currencies on Monday, with the dollar index losing 0.67% of its value, hovering around its weekly lows as traders gauged the potential for less strict trade tariffs under incoming U.S. President Donald Trump. Expectations of high tariffs was a key driver of the dollar’s recent surge, as was growing conviction that the Fed will cut interest rates at a slower pace in 2025 than initially anticipated. However, a recent report by the Washington Post eased this notion as it indicated that Trump's aides were exploring plans that would apply tariffs to every country - but only on sectors seen as critical to U.S. national or economic security, easing concerns about harsher and wider levies.
In wall street, risk sentiment appears improved, as the main stock indices ended the last two sessions higher, with the technology sector standing out as Nvidia gained more than 7% and Super Micro Computer surged by more than 20% since Friday. In other news, the United States government has designated Tencent Holdings Ltd and Contemporary Amperex Technology as entities with ties to the Chinese military, move that could exacerbate existing tensions between the US and China.
Oil prices declined on Monday with the two main benchmarks WTI and Brent down by 1.15% and 0.5% respectively amid prospects of rising supply from non-OPEC countries that, coupled with weak demand from China, is expected to keep the oil market well supplied this year. Both major oil benchmarks rallied last week amid concerns about tighter Russian and Iranian supply following Western sanctions
On the cryptos front, Bitcoin and Ethereum were up by approximately 3.91% and 1.47% on Monday, with Bitcoin crossing above the $100K mark once again and closing in on its all-time high. This move reflects the growing optimism surrounding the incoming government's pro-crypto stance and its potential to foster greater institutional adoption.
For Tuesday markets will most likely be focusing on Eurozone’s core CPI data to gauge inflation in the region while later in the day, U.S. will publish its JOLTS Job Openings data and ISM Services PMI. Investors are eagerly awaiting key economic data this week, particularly the U.S. jobs report, to gauge the Federal Reserve's interest rate path.
The Euro made a strong recovery on Monday, climbing against the US Dollar after hitting a low of 1.0224 last week. The EUR/USD pair ended the session with gains of 0.76% supported by improved economic data and political developments.
Markets are responding to a series of factors, including European Purchasing Managers Index (PMI) data and preliminary German inflation figures for December. The latest PMI reports from Spain, Italy, France, Germany, and the broader Eurozone all exceeded expectations, showing an encouraging rebound compared to the previous month.
In the U.S., the political climate is also fueling market activity. According to the Washington Post, President-elect Trump is reportedly considering imposing universal tariffs on critical imports, a move that could signal a major shift in U.S. trade policy.
Gold prices dipped slightly on Monday, pressured by a stronger U.S. dollar and expectations of a slower pace of monetary easing by the Federal Reserve.
The yellow metal has been on a downward trajectory since late December, as the Federal Reserve signaled a more cautious approach to cutting interest rates in 2025.
Comments from Federal Reserve officials over the weekend reinforced a hawkish outlook, further pressuring gold prices.
Oil prices edged lower on Monday after a volatile trading session, as initial gains driven by colder weather and robust services activity in Europe were offset by soft economic data and a strong U.S. dollar.
Traders are positioning for more economic stimulus from China as the world’s largest oil importer continues to face economic headwinds. Inflation data due later this week is expected to offer further clues about Beijing’s policy direction.
The dollar remains a significant headwind for crude, as it reached a two-year high last week. This surge follows the Federal Reserve’s warning of slower interest rate cuts in 2025, coupled with hawkish remarks from Fed officials signaling that the fight against inflation is ongoing.
U.S. stock index futures rose on Monday, buoyed by gains in technology shares that helped Wall Street recover from a sluggish start to the new year. Market attention is now turning to an upcoming keynote address by Nvidia CEO Jensen Huang, which has fueled optimism in tech stocks.
Outside the tech sector, broader market gains were tempered by comments from President-elect Donald Trump, who denied reports that his administration would pursue a more selective approach to trade tariffs.
Despite Monday’s gains, Wall Street remains under pressure due to lingering concerns about a slower pace of Federal Reserve interest rate cuts in 2025. Persistent inflation and a strong labor market have dampened expectations for aggressive monetary easing.
This week, investors are closely watching U.S. Nonfarm Payrolls data, due on Friday, for further insights into the economy and the Fed’s policy direction.
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