〇 Dollar Strength Prevails Amid Trump’s Tariff Pressures: A Tense Market Outlook
This week’s forex market is heavily influenced by Trump’s tariff policies. U.S. President Donald Trump has announced a 25% tariff on Colombia over forced deportation issues, with a potential escalation to 50%. Additionally, newly appointed Treasury Secretary Bessent expressed support for a plan to start with a flat 2.5% tariff, which could gradually increase. This has driven strong dollar buying across the market.
Tokyo Market Movement
- USD/JPY:
The pair rose from a low of 154.49 to a high of 155.95 before retracing to around 155.50 after Japan’s inflation data indicated rising price pressures. However, the dollar remains in a dominant position against the yen. - EUR/USD:
The euro dropped from 1.0494 to 1.0425 as broad dollar strength persisted.
Trump reiterated that “tariffs are a means to protect our citizens, businesses, and nation,” heightening the unpredictability surrounding tariff-related news. The market remains cautious and sensitive to further developments.
Key Highlights in Global Markets
Economic Data:
- France Consumer Confidence (January)
- Hungary Central Bank Policy Rate (January)
- U.S. Durable Goods Orders (December Preliminary):
- Expected: +0.6% (Previous: -1.2%)
- Excluding transportation: +0.3% (Previous: -0.2%)
- Signs of recovery anticipated.
- U.S. Housing Price Index & S&P Case-Shiller Index (November)
- U.S. Conference Board Consumer Confidence Index (January)
Speeches & Events:
- European Session:
- ECB Bank Lending Survey.
- Speeches by Banque de France Governor Villeroy de Galhau and ECB Board Member Cipollone.
- U.S. Session:
- 2-Year FRN Auction ($30 billion).
- 7-Year Treasury Auction ($44 billion).
Corporate Earnings:
Major earnings reports, including Starbucks, Boeing, GM, and Xerox, could influence equity markets and potentially spill over into forex volatility.
Strategy and Key Currencies
Canadian Dollar:
The CAD remains a currency to watch. Trump’s statements and tariff measures could significantly impact the loonie, favoring a sell-on-rally approach.
Other Major Currencies:
Amid heightened volatility, cautious and timely entries are crucial. Pay close attention to USD/JPY’s resistance levels and potential euro rebounds.
Summary
The intensification of Trump’s tariff pressures has set a tense tone across markets. The dollar’s strength dominates, while the Canadian dollar and euro demand close monitoring. Staying flexible, managing risk effectively, and keeping a close eye on both economic indicators and political developments are essential for navigating the current market landscape.
