The US dollar is currently bracing for volatility as pivotal market shifts sparked by President Donald Trump are gaining global steam. Donald Trump, being an avid tariff proponent, is currently on a path toward deploying aggressive tariffs on nations, sparking widespread market mayhem. This shift is triggering nations to issue counter-tariffs, putting the US dollar in a wobbly situation. In this wake, the dollar may topple even more due to significant key events that may unravel throughout this week.
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US Dollar To Brace For More Volatility?
With Donald Trump assuming the reins as the 47th US president, his strategy of deploying tariffs on countries with the intent of bolstering the US economy is gaining widespread scrutiny. However, this scrutiny is barely making an impact on Trump, who is constantly working towards deploying tariffs on nations in quest of bolstering US manufacturing and productivity.
That being said, per the Kobeissi letter, uncertainty about tariffs is causing significant mayhem in the US markets. The trade policy uncertainty index, a crucial index tracking how newspapers discuss trade policy uncertainty, is also on the rise. This development is indicative of an unclear market stance, impacting the US economy’s dynamics at large.
In addition to this, Trump is also planning to announce reciprocal tariffs this week, which can result in more market volatility, eventually impacting the US dollar.
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US Dollar To Fall?
Per KBL, Trump may announce a spree of reciprocal tariffs this week. The US president has already announced standard 25% tariffs on steel and aluminum imports from all countries, initiating the aforementioned process.
If this continues, countries may eventually gear up to issue counter-tariffs, which could push the US dollar to explore the throes of low price volatility.
“Uncertainty about tariffs is skyrocketing. A record 44% of S&P 500 companies have discussed tariffs so far on their Q4 2024 earnings calls. This exceeds the previous high seen in 2018 in the last US-China trade war. At the same time, the trade policy uncertainty index is now at its highest since 2019. On Friday, President Trump said he will announce reciprocal tariffs “on many countries” this week. More market volatility is coming.”
Among other things, the US dollar is also bracing for new data reveals. The list includes PPI and CPI data which is set to be released this Tuesday/Wednesday.
In response to the current market chaos, investor sentiment has been tilting towards gold, with the precious yellow metal touching $2900 in the latest feat.
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