Markets saw a calmer trading day yesterday, the quietest since the announcement of new U.S. tariffs. Despite ongoing confusion over tariffs on tech imports from China, volatility significantly decreased across most sectors. After two weeks of high volatility, several assets reached new highs or lows, including major U.S. stock indices, the U.S. Dollar, and Gold.
Tariff Confusion Dominates News
The main story surrounding the U.S. tariffs remains the uncertainty about the rates applied to Chinese electronic imports. Some reports suggest they could be either 0% or 20%. Additionally, President Trump proposed an exemption for automobile imports, which gave a boost to major automotive stocks.
Here is the latest breakdown of U.S. tariffs:
- 145% on Chinese imports (with exceptions for electronics, which could have a 0% or 20% rate)
- 25% tariff on Mexican and Canadian imports, unless covered by prior agreements
- 25% tariff on automobile imports
- 10% tariff on other imports, which may increase after a 90-day pause ending July 7th
Markets Show Optimism
Stock markets are currently trading higher, with hopes rising over the potential for tariff exemptions and progress in trade negotiations. However, the gains remain modest. The Chinese HSI is up by 0.13%, the Japanese Nikkei 225 has gained 0.84%, and the German DAX 30 is leading with a 0.96% increase.
Forex Market Update
In the Forex market, the New Zealand Dollar is the strongest major currency today, while the Swiss Franc is the weakest. This suggests a “risk-on” mood as the London session begins. The U.S. Dollar has weakened, recently hitting a four-year low. However, the U.S. Dollar Index is finding support around 99.27, potentially setting up a long-term buy opportunity for USD traders.
Gold and Bitcoin
Spot Gold reached a new record high yesterday but has since pulled back slightly, consolidating about $20 off the peak. Traders may still prefer long positions due to the ongoing bullish trend. Bitcoin is also showing positive signs, testing its recent highs near the key resistance level of $86,215. A successful break above this level would signal further upward momentum.
Global Economic Outlook
The U.S. National Economic Council Director, Kevin Hassett, reported that over 10 countries have presented strong trade deal offers to the U.S. On the Canadian side, the Bank of Canada is unlikely to pause rate cuts in tomorrow’s policy meeting. Analysts are now predicting only a 58% chance of another rate cut due to factors like the 25% tariffs, rising inflation, and weaker employment data. Canada’s CPI data is expected to remain at 2.5%, the same as the previous year.
With markets stabilizing, there’s growing optimism for a potential recovery, though much uncertainty remains.
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