The US dollar climbed as traders positioned for escalating global trade tensions, following President Donald Trump’s renewed tariff rhetoric. The administration’s move to impose a 25% levy on steel and aluminum imports has heightened market anxiety, compounding uncertainty ahead of Federal Reserve Chair Jerome Powell’s upcoming congressional testimony. Meanwhile, speculation is mounting over Trump’s potential announcement of reciprocal tariffs targeting multiple trade partners.
Investor sentiment remains tethered to shifting White House policies rather than economic fundamentals, with markets increasingly reactive to trade developments. Powell’s testimony will be a key event, offering insights into the Fed’s stance on the economic impact of trade policies and the trajectory of monetary easing. While officials have signaled no urgency to accelerate rate cuts, Powell’s remarks will be closely dissected for cues on future policy adjustments.
Labor Market Moderates, Inflation Data in Focus
Recent nonfarm payrolls data indicate a cooling labor market, with revisions revealing softer—but still resilient—job growth in early 2024. This week’s inflation figures are set to play a crucial role in shaping rate expectations, with markets currently pricing in just one additional Fed cut this year.
Commodities Steady as Traders Await Trade Clarity
In commodities, price action remained subdued as market participants await further details on the implementation and scope of Trump’s latest tariff measures. Investors are closely monitoring developments for potential supply disruptions and inflationary pressures that could ripple through key sectors.
With heightened geopolitical risks and unpredictable trade policies dominating the macroeconomic landscape, traders must remain agile in positioning portfolios amid evolving market dynamics. Today’s events will set the tone for global asset pricing in the sessions ahead.