Asset Summary – Thursday, 10 April
GBPUSD is exhibiting upward momentum, primarily driven by a weakened US dollar. Heightened trade tensions between the US and China, coupled with retaliatory tariff announcements from both nations, are contributing to this dollar depreciation. Furthermore, the European Union’s approval of tariffs on US goods adds to the negative sentiment surrounding the US currency. In the UK, concerns expressed by a Bank of England Deputy Governor regarding the potential impact of these tariffs on UK growth are influencing market expectations for future interest rate cuts. The increasing probability of aggressive rate cuts by the Bank of England, including a potential 50 basis point cut in May and a series of cuts throughout the year, is also factoring into the dynamics affecting the pair.
EURUSD is gaining value as trade tensions between the US and China escalate, leading investors to seek alternatives to the US dollar. The increase in tariffs imposed by both nations is diminishing the dollar’s appeal as a safe-haven asset, simultaneously, the Euro is strengthened by political stability in Europe, specifically the coalition agreement in Germany, which paves the way for new leadership. Furthermore, the anticipated interest rate cut by the European Central Bank this month appears to be already priced in, minimizing any potential negative impact on the Euro. These combined factors are pushing the EURUSD towards its highest level in several months.
DOW JONES is positioned for continued gains as positive market sentiment follows a substantial rally driven by President Trump’s tariff pause announcement. The index experienced a significant surge, mirroring gains in the S&P 500 and Nasdaq Composite. This upward trend is likely to be sustained, although the ongoing trade tensions with China and the potential for tariffs on the EU present a degree of uncertainty. The strong performance of leading technology companies suggests a broad-based recovery, potentially benefiting the Dow Jones through its constituents that participate in the tech sector.
FTSE 100 experienced a significant decline, driven by escalating global trade tensions. Retaliatory tariffs imposed by China and the European Union on US goods triggered market uncertainty, negatively impacting major UK stocks. Pharmaceutical companies like AstraZeneca and GSK faced substantial losses following indications of potential tariffs targeting the sector. Declining crude prices further pressured oil giants Shell and BP, contributing to the overall downturn. Despite a positive trading update from JD Sports, the lack of commentary on potential US tariff risks raises concerns given their significant presence in the American market.
GOLD is experiencing upward price pressure as escalating trade tensions between the US and China drive investors toward safe-haven assets. The tit-for-tat tariff increases, despite some broader de-escalation efforts, are creating economic uncertainty, bolstering gold’s appeal. Concerns within the Federal Reserve regarding rising inflation and slower growth, as indicated by recent FOMC minutes, further support the bullish outlook. The market is keenly awaiting upcoming US CPI and PPI data to gauge the Fed’s future interest rate policy. Additionally, substantial inflows into gold-backed ETFs in the first quarter of the year demonstrate strong investor confidence in the precious metal.