Breaking News: This Could Shake Up Markets

Market Overview

On February 2, 2025, President Donald Trump signed an executive order imposing tariffs on imports from Canada, Mexico, and China, effective February 4, 2025. This includes a 25% tariff on most goods from Canada and Mexico, along with a 10% tariff on energy products from Canada and some imports from China.

In retaliation, Canadian Prime Minister Justin Trudeau announced plans for equivalent tariffs on $155 billion worth of U.S. imports, while Mexican President Claudia Sheinbaum confirmed similar intentions. Both leaders warned of significant impacts on American consumers.

China plans to file a complaint with the WTO and may take countermeasures, although it has not yet imposed tariffs on U.S. goods. The announcement has already caused declines in Asian markets, with the Hang Seng Index down 1.9% and Japans Nikkei 225 dropping 2.4%.

Economists predict increased consumer prices and inflation, estimating that the average American household could see a decline in purchasing power of $1,000 to $1,200 annually due to these tariffs.

Market Analysis

GOLD - GOLD prices peaked at 2817.100 but retraced to below 2789.390, testing a key support level. Despite this pullback, our bullish outlook remains as we anticipate further upside, although Trump's tariffs pose a challenge to the rally amid a strengthening dollar expected to last until February 4. The MACD shows increasing volume, and the RSI indicates oversold conditions, suggesting ongoing selling pressure. Still, major banks and institutional investors may increase their GOLD positions to hedge against dollar risks.

SILVER - SILVER prices are expected to remain contained until GOLD reaches another new high. We anticipate further buying in the coming days. The MACD currently shows continued selling momentum, while the RSI also signals potential downside pressure. The EMA200 serves as a strong support level, with 30.6675 acting as a key support from the previous swing low. Banks may also turn to SILVER as a risk-hedging asset, particularly if GOLD reaches $3,000 per ounce.

DXY - The dollar surged following Trump‘s weekend announcement confirming the application of tariffs. This has strengthened the dollar significantly and heightened expectations of a trade war under his administration. The tariffs also contribute to inflationary pressures, further increasing the dollar’s appeal to investors. More dollar strength is expected in the coming days.

The MACD and RSI both show strong buying momentum, while the market has left a large gap to be filled.

GBPUSD - As expected, the Pound consolidated despite the dollars previous weakness. The MACD and RSI indicate continued downside momentum, suggesting that the market may move lower before attempting to fill the gap. Price action has decisively shifted to a bearish trend, with the EMA200 acting as resistance.

AUDUSD - We are seeing a familiar pattern here where all fx pairs against the dollar are experiencing a massive drop due to its inflationary nature at the moment. The MACD and the RSI reflect the growth of the strength in the movement, alongside the prices gapping to the low.

NZDUSD - It is important to note that while the markets are seeing a good amount of growth for the prices, one should not chase after the sudden move unless specified by your strategy. Chasing after the move will only result to more losses. There is potential for markets to cover the gap left behind before a continuation low, waiting for that will prove beneficial as more tariffs are expected in the future. This means that, fundamentally, it is highly expected for the dollar to continue pushing prices down.

USDJPY - The Yen failed to break 153.868 and has now moved above the previous swing high and the EMA200. The MACD and RSI reflect growing bullish momentum, shifting the overall bias to buying. While the Yen is expected to continue strengthening, its movements are more controlled compared to other currencies, partly due to the Bank of Japans (BOJ) continued hawkish stance. Whether this will change remains to be seen in upcoming BOJ meetings.

USDCHF - The Franc gapped higher after a period of consolidation, proving to be a relatively stable currency amid market volatility. It is expected to continue rising, with the MACD and RSI confirming increasing buying momentum. However, rather than rushing into trades, we will wait for a pullback to fill the gap before entering long positions.

USDCAD - The CAD is seeing strong buying pressure as expected, largely due to being directly impacted by the tariffs. It is anticipated to continue rallying with little resistance. While there may be short-term consolidation, the medium- to long-term outlook remains bullish. We will maintain our long positions.

COT Report Analysis

AUD - WEAK (5/5)

GBP - WEAK (4/5)

CAD - WEAK (4/5)

EUR - WEAK (4/5)

JPY - WEAK (1/5)

CHF - WEAK (5/5)

USD - STRONG (4/5)

NZD - WEAK (4/5)

GOLD - STRONG (5/5)

SILVER - STRONG (4/5)