DBG Markets: Market Report for Feb 03, 2025

Market Overview

Trump Imposes New Tariffs

On February 2, 2025, President Donald Trump signed an executive order imposing tariffs on imports from Canada, Mexico, and China. The measures include a 25% tariff on most goods from Canada and Mexico and a 10% tariff on energy products from Canada and various imports from China. These tariffs will take effect on February 4, 2025.

In response, Canadian Prime Minister Justin Trudeau announced plans for equivalent 25% tariffs on approximately $155 billion worth of U.S. imports. Mexican President Claudia Sheinbaum also confirmed Mexico's intention to impose retaliatory tariffs. Both leaders have warned that these actions could significantly impact American consumers.

The tariff announcement triggered sharp declines in Asian markets, with investors bracing for a potential trade war. The Hang Seng Index fell 1.9%, while Japans Nikkei 225 dropped 2.4%.

Economists warn that the tariffs could drive up consumer prices and contribute to inflation. Estimates suggest that the average American household may experience a decline in purchasing power ranging from $1,000 to $1,200 annually due to the new trade barriers.

GOLD - After reaching a record high of 2817.100, GOLD prices retracted below 2789.390, testing the EMA200 and the previous swing low. Despite this pullback, our bullish bias remains intact, and we anticipate further upside. However, Trump‘s tariffs pose a challenge to GOLD’s rally as the dollar continues to surge. This dollar strength is expected to persist until the tariffs take effect on February 4.

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.

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.