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04/02/2025 - 08:39 UTCThe US dollar fell against most major currencies on Monday, with the dollar index (USDX) down by almost 1% after U.S. President Donald Trump postponed plans to impose trade tariffs against Canada and Mexico. Regional currency gains were capped because the 10% tariffs on Chinese goods were still scheduled to go into effect. The U.S. President is set to speak with Chinese President Xi Jinping as soon as this week, the White House said, potentially setting up a diplomatic deal that could avoid a greater trade war.
The main US stock indices started off the week with losses, although they rebounded somewhat from sharper drops earlier in the day. The initial market downturn was triggered by the announced tariffs which prompted a rush for safe-haven investments. However, the US decided to delay the implementation of tariffs on Mexico, for a one-month period, after the country agreed to bolster its northern border security with 10,000 National Guard members to combat illegal drug trafficking, especially fentanyl.
Following the implementation of 10% U.S. trade tariffs on Chinese goods, U.S. stock futures declined in Asian trading on Tuesday. China responded with a series of retaliatory measures, including import tariffs on select U.S. products, export controls on tungsten materials (according to Bloomberg), an antitrust investigation into Google, and the addition of PVH Corp and Illumina to its list of "unreliable entities."
Leading cryptocurrencies Bitcoin and Ethereum posted a significant reversal late on Monday's session, recovering from lows of $91,217 and $2,146 to end the session at $101,354 and $2,886 respectively.
For Tuesday, market attention is turned towards JOLTS Job Openings and Factory Orders from the US while on the earnings front, several major players will announce their quarterly results including Alphabet, Merck&Co, PepsiCo, AMD, Amgen, Pfizer, Spotify and Paypal. For the week ahead, the spotlight will be on the U.S. Non-Farm Payrolls data.
The EUR/USD pair dropped sharply following renewed tariff threats from U.S. President Donald Trump, sending ripples through global markets. However, the sell-off moderated after the Trump administration granted a 30-day reprieve on impending tariffs for Canada and Mexico. While the possibility of U.S. tariffs targeting the European Union remains on the table, details from the White House remain scarce.
Markets experienced a volatile start to the trading week, with risk appetite initially plunging as the U.S. appeared poised to impose broad tariffs on key allies. A last-minute delay in implementing these measures helped ease bearish sentiment, allowing investor confidence to rebound to previous levels.
Gold prices surged to a record high on Monday as the U.S. announced scheduled tariffs on Canada, Mexico, and China, driving investors toward the metal’s safe-haven appeal.
Despite a slight improvement in market sentiment, gold continues to hold its gains. Tariff developments have remained a key market driver since U.S. President Donald Trump took office.
On the economic front, data from the Institute for Supply Management (ISM) indicated an improvement in U.S. manufacturing activity. Investors will also be closely watching upcoming economic releases, including January’s U.S. Nonfarm Payrolls (NFP) report, alongside commentary from Federal Reserve (Fed) officials, which could further influence market dynamics.
Oil prices saw volatile trading on Monday, briefly rising before closing at a one-month low as markets reacted to U.S. President Donald Trump’s planned tariffs on Canada, Mexico, and China. The expiration of a higher-priced contract also contributed to price fluctuations.
Concerns over potential disruptions to U.S. crude imports from two major suppliers—Canada and Mexico—initially pushed prices over $1 per barrel higher. However, Trump’s decision to delay tariffs on Mexico for one month, following an agreement to bolster border security efforts, helped ease some market anxiety.
In the global oil market, OPEC+—which includes the Organization of the Petroleum Exporting Countries and allies like Russia—announced it will maintain its gradual production increase from April.
Major U.S. stock indexes closed lower on Monday, though they managed to recover some losses after President Donald Trump delayed tariffs on Mexico. Earlier in the session, his decision to impose levies on three major trade partners had sparked a rush toward safe-haven assets, intensifying market volatility.
Trump announced a one-month pause on tariffs targeting Mexico after the country agreed to deploy 10,000 National Guard members to reinforce its northern border and curb the flow of illegal drugs, particularly fentanyl.
Economic data provided a mixed backdrop—U.S. manufacturing expanded for the first time in over two years in January, according to the Institute for Supply Management. However, analysts warn that sustained tariffs could push inflation higher and disrupt supply chains.
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