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Global markets are on edge as the week kicks off, with investors reacting to the latest developments in the escalating US–EU trade dispute. Over the weekend, the United States announced a 10% tariff on imports from eight European countries, linked to its Greenland acquisition plans. The tariffs are set to rise to 25% by June if no deal is reached, fueling concerns about trade frictions. In response, European nations are preparing a counter-tariff package targeting $93 billion in US goods, heightening geopolitical risk.
Dollar Dips as Investors Seek Stability
With US markets closed on Martin Luther King Jr. Day, the US Dollar held steady near the 99.00 level, showing minimal movement against major currencies. The Euro and British Pound gained some ground, while the Japanese Yen and Swiss Franc remained attractive as safe-haven options. Meanwhile, the Canadian Dollar slightly softened despite rising inflation figures, reflecting cautious investor sentiment.
Currencies and Commodities in Focus
EUR/USD hovered near 1.1650, showing resilience against a muted Dollar. GBP/USD climbed toward 1.3440, reflecting renewed buying interest amid uncertainty over potential trade retaliation. USD/JPY held around 158.00 as Japanese political developments and a planned snap election weighed on market confidence. AUD/USD rebounded to the 0.6720 zone following higher-than-expected inflation data in Australia.
Meanwhile, Gold surged to a new record near $4,690 per troy ounce, driven by safe-haven demand amid the growing trade tensions. Investors continue to view gold as a hedge against market volatility, inflation, and currency depreciation.
Looking Ahead: Data and Policy to Drive Volatility
The coming days are packed with economic and policy updates. UK employment figures and German economic sentiment data are expected early in the week, followed by UK inflation reports and a high-profile speech at the Davos Economic Forum. Later, US GDP and core inflation metrics will be released, with markets closely monitoring the potential impact on interest rates. The week will close with the Bank of Japan’s policy decision and key Eurozone manufacturing and services data, keeping global investors alert to shifting trends.
