The major assets bounced back on Tuesday with U.S. stocks rising as Trump delayed tariffs on Mexico and Canada, though trade tensions with China kept investors cautious.
Meanwhile, the U.S. dollar weakened on softer JOLTS data fueling rate cut expectations, while gold hit a record high amid safe-haven demand.
Here’s how your favorite assets traded in the last trading sessions:
Headlines:
- China announced retaliatory tariffs on select American imports and an antitrust investigation into Google
- France government budget deficit shrank from €172.5B to €156.3B in December
- U.S. job openings and labor turnover for December: 7.60M (8.01M forecast, 8.16M previous)
- U.S. factory orders for December: -0.9% m/m (-0.7% forecast, -0.8% previous)
- U.S. RealClearMarkets/TIPP Economic Optimism Index for February: 52.0 (53.0 forecast, 51.9 previous)
- New Zealand GDT auction yielded a 3.7% increase in dairy prices in the period ending Feb 4, its fastest since July 2022
- FOMC member Mary Daly said “We don’t need to be preemptive” and that “We can take our time” before making any more policy changes
- New Zealand employment fell 0.1% in Q4 2024, jobless rate rose to 5.1%
- Japan average cash earnings for December: 4.8% y/y (3.6% forecast, 3.9% previous); Real wages increased from 0.5% y/y to 0.6% y/y
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
U.S. markets bounced back on Wednesday after Trump hit pause on tariffs for Mexico and Canada, giving them a 30-day delay. But he didn’t hold back on China, moving forward with 10% tariffs on Chinese imports. China fired back with its own set of retaliatory measures, slapping 15% duties on U.S. energy exports.
The S&P 500 rose 0.7% to with tech stocks leading the charge and pushing the Nasdaq up 1.4%. Over in Europe, stocks also climbed as easing trade tensions gave investors some breathing room. Meanwhile, 10-year Treasury yields dipped from 4.59% to 4.51% after December’s JOLTS report showed a drop in job openings, adding to signs of a cooling labor market.
Gold hit a fresh record high of $2,853.30, fueled by a softer dollar and safe-haven demand. WTI crude oil slipped to $70.75, weighed down by rising OPEC+ supply and ongoing trade jitters, before shooting up to $72.50 following the JOLTS report. Fed officials Collins and Bostic flagged inflation risks tied to tariffs, underscoring the tricky path ahead for monetary policy.
All in all, markets are juggling trade uncertainty and the potential for rate cuts—a combo that’s boosting precious metals while keeping the pressure on the dollar.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar broad hits on Tuesday, thanks mainly to two key events. First, China announced new retaliatory tariffs on U.S. imports, sparking some dollar selling, though Trump’s move to delay tariffs on Mexican and Canadian goods helped soften the blow.
Another drop kicked in as the U.S. session got going, with JOLTS job openings coming in way below expectations. The weaker-than-expected labor data ramped up expectations for earlier Fed rate cuts and sent the dollar lower across the board.
USD/CAD saw the biggest drop, with the Canadian dollar getting a boost from the tariff delay. EUR/USD bounced back from the previous day’s losses and kept climbing, while the yen and commodity currencies also gained ground against the greenback.
Adding to the pressure, Fed officials Collins and Bostic flagged inflation risks tied to tariffs, making the policy outlook even trickier. The mix of trade uncertainty and shifting rate expectations kept the dollar and Treasury yields under pressure for the rest of the session.
Upcoming Potential Catalysts on the Economic Calendar:
- France industrial production at 7:45 am GMT
- Spain services PMI at 8:15 am GMT
- Italy services PMI at 8:45 am GMT
- France final services PMI at 8:50 am GMT
- Germany final services PMI at 8:55 am GMT
- Euro Area final services PMI at 9:00 am GMT
- U.K. final services PMI at 9:30 am GMT
- U.K. PPI at 10:00 am GMT
- U.S. FOMC member Barkin to give a speech at 12:30 pm and 2:00 pm GMT
- U.S. ADP non-farm employment change at 1:15 pm GMT
- Canada trade balance at 1:30 pm GMT
- U.S. trade balance at 1:30 pm GMT
- U.S. final services PMI at 2:45 pm GMT
- U.S. ISM services PMI at 3:00 pm GMT
- U.S. crude oil inventories at 3:30 pm GMT
- U.S. FOMC member Goolsbee to give a speech at 7:30 pm GMT
- U.S. FOMC member Bowman to give a speech at 8:00 pm GMT
It’s a busy calendar day with traders likely seeing increased volatility from Eurozone PMIs, U.S. ADP employment data, and ISM services PMI. Meanwhile, Fed speeches could shift rate expectations.
Tariff-related headlines may also trigger sharp market moves, adding to the data-driven fluctuations across FX, equities, and commodities.
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