Market Shake-Up: Tariffs, Inflation, and Trading Opportunities

This week, the markets react to a major announcement from Donald Trump: a proposed 25% tariff on aluminum and steel imports. The potential impact on global trade is significant, and traders are already adjusting their strategies. I closely monitor the market response, particularly in commodities and currencies tied to these industries.

Gold prices surge near record highs as investors seek safe-haven assets. Inflationary concerns rise, and central banks, including the People's Bank of China, continue accumulating gold. With gold reserves increasing for the third consecutive month, hitting 73.5 million troy ounces, it is clear that global institutions are bracing for economic turbulence.

Tomorrow, Federal Reserve Chair Jerome Powell testifies, providing insights into monetary policy. While he is unlikely to explicitly state future rate cuts, his comments could hint at potential adjustments. Traders will analyse his words for signals on inflation expectations and interest rate trajectories. The timing is crucial, as the Consumer Price Index (CPI) data releases soon after, with expectations of a 0.3% core CPI increase from the previous 0.2%.

The U.S. dollar is expected to strengthen in response to Powell’s statements and upcoming economic data. Meanwhile, in the UK, GDP data releases on Thursday will significantly impact the British pound. Additionally, Germany’s CPI figures will drive volatility in the euro. I anticipate movement in EUR/USD and GBP/USD pairs, creating trading opportunities in both directions.

Friday brings the U.S. retail sales report, a crucial indicator of consumer spending trends and potential inflationary pressure.

Traders should stay adaptive, closely tracking CPI, GDP, and retail sales figures. Market volatility will be high, and opportunities will arise across multiple asset classes. Now is the time to act, analyse data, and execute well-informed trades.

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