Asset Summary – Friday, 11 April
GBPUSD is exhibiting upward momentum, driven by a weaker US dollar and a reassessment of UK monetary policy expectations. The dollar’s decline stems from uncertainty surrounding US trade policy, particularly conflicting signals regarding tariffs. Concurrently, expectations for aggressive interest rate cuts by the Bank of England have diminished, lending support to the pound. Furthermore, tentative signs of economic improvement in the UK, as indicated by a projected GDP increase, are contributing to a more positive outlook for the currency pair. This combination of factors suggests the potential for continued, albeit volatile, appreciation in the near term.
EURUSD experienced upward pressure due to a combination of factors. The EU’s tariff suspension on the US bolstered the euro as it eased trade tensions and allayed fears of economic downturn. Simultaneously, reduced US tariffs on some countries and increased tariffs on China injected uncertainty into the global market, indirectly favoring the euro. Furthermore, revised expectations for ECB rate cuts, indicating a less dovish stance than previously anticipated, provided additional support for the euro, leading to a higher valuation against the US dollar. Traders are now less certain about immediate rate cuts.
DOW JONES is facing downward pressure as U.S. stock futures are declining, reflecting a week of volatility driven by trade uncertainty. A significant drop in major indexes, including the Dow itself, highlights weakened investor confidence following a brief rally triggered by tariff pause news. Renewed trade war anxieties, evidenced by increased tariffs on Chinese imports, are contributing to the negative sentiment. Traders are closely monitoring upcoming U.S. consumer sentiment data and earnings reports from major financial institutions, which could further influence the Dow’s direction.
FTSE 100 experienced a significant surge, marking its largest gain since 2020, primarily driven by a shift in US trade policy. The suspension of new tariff increases instilled confidence in the global economy, positively influencing investor sentiment. The financial sector and commodity-related stocks benefitted the most from this renewed optimism, with Anglo American seeing a notable rise due to investor anticipation surrounding the sale of its steelmaking coal unit. However, the positive trend was tempered by concerns surrounding the UK grocery market, where increased competition is expected to put pressure on profits for companies like Tesco, leading to a decline in their share value.
GOLD is experiencing a significant upward trend, achieving record highs driven by several factors. The weakening US dollar makes gold relatively cheaper for investors holding other currencies, boosting demand. Heightened trade tensions between the US and China are creating uncertainty and anxiety in the market, pushing investors towards gold as a safe-haven asset. The US imposing higher tariffs on Chinese goods intensifies these concerns. Furthermore, unexpected declines in US consumer prices have increased expectations that the Federal Reserve will implement interest rate cuts, potentially making gold more attractive compared to interest-bearing assets. However, these rate cut expectations are complicated by the inflationary pressures that could arise from increased tariffs on Chinese goods. Overall, the current economic and geopolitical climate seems to favor continued strength in the gold market, positioning it for potentially its best weekly performance in several months.