The market’s brief moment of optimism came crashing down yesterday as reality set in: the US-China trade war is far from over.
Investors initially welcomed the US decision to defer reciprocal tariffs for 90 days, but the relief rally quickly reversed as doubts grew over the feasibility of negotiating multiple complex trade deals within that window.
Risk Appetite Fades as Trade Tensions Resurface
As the mood soured, risk appetite dropped sharply. The escalation in trade rhetoric, coupled with a lack of concrete diplomatic progress, left markets on edge. Tariffs may be delayed — but the threat of imposition still looms large.
Safe-Haven Currencies Rise
Currency markets reacted swiftly. Classic safe havens like the Swiss franc, Japanese yen, and euro all benefited from the shift in sentiment.
Meanwhile, both the US dollar and British pound came under pressure, allowing the euro to hit fresh year-to-date highs against both currencies — a clear signal of where investor confidence currently lies.
UK GDP Surprises to the Upside
Amid the market volatility, there was a silver lining for Sterling: the UK’s monthly GDP for February exceeded expectations, rising by 0.5% compared to a forecast of just 0.1%.
This better-than-expected growth offers a glimmer of hope for the UK economy, which has been weighed down by high interest rates and policy uncertainty in recent months.
US Consumer Sentiment on the Radar
Looking ahead, attention will shift to the University of Michigan’s consumer sentiment index, due later today. As a leading indicator of US economic health, it could influence market direction — particularly for the dollar — depending on whether it signals resilience or further strain among American households.
Plan Proactively in Unpredictable Markets
In today’s fast-moving landscape, staying informed isn’t enough — it’s crucial to be proactive. Whether you’re concerned about tariff-driven currency moves or want to make the most of positive UK data, Qumoney’s FX experts are here to guide you.
Reach out today for strategic insights and personalised solutions to help your business stay one step ahead.