08/04/2025 - 07:37 UTCThe US Dollar Index (USDX) closed Monday’s session above the 103.00 level, successfully extending Friday’s rebound despite ongoing market volatility. Initial optimism was fuelled by reports indicating the US was considering a temporary 90-day suspension of tariffs for all countries except China—a proposal reportedly put forward by National Economic Council Director Kevin Hassett.
According to the CME FedWatch Tool, market participants are increasingly betting on a shift in Federal Reserve policy, with nearly 200 basis points of rate cuts priced in for the rest of 2025. This stands in contrast to the Fed’s cautious tone, as policymakers continue to emphasize that escalating trade uncertainty complicates the path toward easing monetary policy.
U.S. stock index futures surged on Monday evening after a turbulent trading session left Wall Street with mixed results. Investors speculated on whether President Donald Trump would offer a path for countries to negotiate tariff reprieves, adding to the volatility. The day was marked by wild fluctuations, with U.S. stocks initially tumbling amid rising trade tensions and rumors regarding tariff policies. The US 500, US 30, and US Tech 100 all opened sharply lower, continuing the heavy losses from the previous week. Markets briefly turned positive after an unverified post on social platform X suggested that President Trump might consider a 90-day tariff pause for all countries except China. This led to a swift rally, with major indices erasing earlier losses. However, the White House quickly debunked the rumor, causing markets to reverse course and resume their downward momentum.
Asian equities posted a modest recovery on Tuesday, rebounding from sharp losses in the previous session as a tech-led rally in U.S. markets overnight and bargain hunting offered some relief to rattled investors. Most regional benchmarks saw strong gains, buoyed by a rebound in U.S. technology shares and a wave of dip-buying following three days of intense selling pressure.
Gold prices extended their downward spiral on Monday, as investors fled to the safety of the U.S. Dollar amid growing concerns over a global economic slowdown sparked by escalating trade tensions. Adding to the pressure on gold, U.S. Treasury yields moved sharply higher, with the benchmark 10-year yield climbing nearly 15 basis points to 4.147%. Rising yields tend to reduce the appeal of non-yielding assets like gold.
Looking ahead, US data will take center stage this week, with key inflation and sentiment indicators due in the coming days. The Consumer Price Index (CPI) report is scheduled for release on Thursday, followed by the Producer Price Index (PPI) and the University of Michigan (UoM) Consumer Sentiment Index on Friday. These figures will offer the final snapshot of inflation and consumer sentiment before any potential tariff-related shifts take effect, making them a crucial reference point for the remainder of the year.
On Monday, the EUR/USD pair continued its downward slide, marking a second consecutive day of losses. The decline pushed the exchange rate to the 1.0900 level, with the US Dollar regaining control of risk-off flows.
Following a turbulent week, the US has fully embraced a protectionist trade stance, despite the absence of necessary industry infrastructure to support it. Import tariffs have now been introduced, with a blanket 10% import tax on all goods from every country, accompanied by “reciprocal” tariffs based on the ratio of US imports to exports.
Meanwhile, European Union (EU) President Ursula von der Leyen argued that while the EU was open to tariff negotiations with the U.S., the bloc was also preparing to retaliate if necessary.
US economic data takes center stage this week and these reports are key indicators, providing crucial insights into inflation and sentiment trends before the major trade tariff events of 2025.
Bitcoin rebounded early on Tuesday, climbing from five-month lows as traders capitalized on the dip in the world’s largest cryptocurrency. However, market sentiment remained fragile, with President Donald Trump’s trade tariffs continuing to cast a shadow over broader financial markets.
The recent trade tensions have not only affected traditional markets but have also significantly impacted the cryptocurrency sector. On Monday, Bitcoin prices fell to approximately $74,500, marking a sharp decline from its February high of over $100,000. Shares of crypto-related companies were also hit hard, with companies like Strategy and Coinbase experiencing notable drops.
These developments underscore the increasing correlation between traditional financial markets and the crypto market, highlighting how geopolitical events like tariff announcements can influence investor sentiment across various asset classes. As the situation evolves, both traditional and digital asset investors remain cautious, closely monitoring policy decisions and their potential economic implications.
Oil prices dropped 2% on Monday, hitting their lowest point in nearly four years amid concerns that U.S. President Donald Trump’s recent trade tariffs could push global economies into recession, thereby dampening energy demand.
Fears of a full-scale global trade war were confirmed on Friday when China, the world's second-largest economy, announced it would impose additional 34% tariffs on U.S. goods in retaliation for Trump’s latest tariffs. In response, Trump threatened to impose a 50% tariff on China if Beijing did not withdraw its retaliatory measures, declaring that "all talks with China concerning their requested meetings with us will be terminated."
On the supply side, Saudi Arabia made significant cuts to crude oil prices for Asian buyers on Sunday, marking the lowest levels in four months. In a further move that contributed to the downward pressure on prices, the OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, accelerated plans to increase oil output.
U.S. stocks cut some of their losses on Monday, but ultimately ended lower after a volatile trading session, fueled by ongoing speculation about whether President Donald Trump would offer countries a way to negotiate relief from tariffs. The major indices opened sharply lower, continuing the selloff from the previous week.
During a press briefing on Monday, President Trump reiterated that the United States was not considering pausing the tariffs that have been wreaking havoc on the markets. Earlier in the day, stocks experienced a brief bounce on unconfirmed reports that Trump might consider suspending his sweeping trade tariffs for 90 days, excluding China.
Chip stocks, particularly Nvidia, led the market rebound as investors bought the recent dip. Other tech giants, including Amazon and Meta Platforms Inc, rebounded from session lows, helping the broader market recover slightly.
However, Apple Inc and Tesla continued to trade in the red. Tesla was hit further by Wall Street downgrades, with Wedbush cutting its price target on the stock from $550 to $315. The firm cited concerns about a brand crisis and a potential decline in demand due to tariffs.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
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