A look ahead at European and global markets from Kevin Buckland
Everything that investors did about another presidency of Donald Trump proved true in the first hours of the first day, and financial traders in particular were left with whiplash.
The absence of tariff threats in Trump's inauguration speech was taken as a green light to sell the dollar. Hours later the new US president announced plans for 25% tariffs on Canada and Mexico from February 1. The peso and the peso fell.
The moves reflect volatility experienced in Trump's first term as CEO, and markets should remain vigilant. But as it was then, Trump's salvo could turn into a bargaining chip.
Trump has always said he is a salesman and investors may have been impressed by his comments on TikTok and China looking like an invitation to the table, and came with a warning of tariffs if Beijing tried to block the deal.
In the EU as well, Trump said tariffs are one way to “fix” the trade deficit. One would be the massive sale of US oil and gas.
Despite these comments, Trump backed away from the global tariff, saying “we're not ready for that yet”.
Funds have been in a yo-yo range for the past several hours. However, at noon in Asia, the US dollar was against a basket of its major rivals, although not as strong as it was on Tuesday.
China's central bank has protected the yuan by setting the strongest rate since early November. Considering China has been the focus of Trump's tariff warnings, however, analysts say a long-term trend seems unlikely.
The euro and sterling were off about 0.3% each, while the yen strengthened. The Japanese currency was supported by the tightening of policy by the Bank of Japan on Friday, despite concerns about the impact of any US tariffs on the auto industry.
Meanwhile, Trump's meme coin has risen to more than $10 billion in market value, helping lift other cryptocurrencies along with it. This includes bitcoin, which pushed to a new all-time high above $109,000, although it has retreated below $102,000 in recent trades.
In today's European economic calendar, Britain releases jobs data and Germany has the ZEW opinion poll.
EU finance ministers are meeting in Brussels to discuss how to improve competitiveness.
ECB Vice-President Luis de Guindos joins the ECOFIN meeting, also in the Belgian capital.
No Fed speakers are scheduled for this week, with officials in a blackout ahead of next week's policy meeting.
Key developments likely to impact markets on Tuesday:
– UK Payments (December)
– German ZEW survey (Jan)
-Canada CPI (Dec)