Trade tariffs captured the mood of investors in financial markets in the past week. Although we learned a number of important macroeconomic releases and financial results of key companies, uncertainties about the future of international trade dictated changes in various instruments. The topic of trade tariffs and the future policy of the US president will remain a key aspect for the markets, but in the coming week it is worth paying attention to such issues as the publication of US inflation, Powell's testimony before Congress and the results of companies such as McDonald's, Coca-Cola and Cisco. In view of this, markets such as USDJPY, US500 and GOLD are worth paying attention to.
USDJPY
The risk of trade tariffs led to an initial strengthening of the dollar, but later the world's most important currency lost value when some tariffs were postponed. It is worth noting that the dollar lost heavily against the yen, as pressure is mounting for further interest rate hikes in Japan. Nevertheless, in the coming week we will learn a number of important macroeconomic readings from the US. These will include CPI inflation on Wednesday and retail sales on Friday. These data will be crucial from the perspective of the Fed, which is putting off further interest rate cuts for the moment.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appUS500
U.S. indices have fully recovered from initial concerns over trade tariffs. The U.S. economy had the most to lose in the event of a trade war in the continental United States. Maintaining tariffs with China, however, raises problems for the future prospects of US earnings. It is worth noting what companies such as McDonald's, Coca-Cola and Cisco, which have a presence not only in China, but also globally, will say about the tariffs in their earnings comments.
Gold
Gold is reaching new historic highs overnight, on the back of fears about the future. Geopolitical risks have been driving gold prices higher for several months now. However, monetary policy also plays an important factor in the further price quotations of bullion. Next Tuesday is the first day of Powell's hearings before the US Congress. More importantly, he will be questioned by the new authorities, so this could be an important event from the perspective of expectations for interest rates. The exclusion of reductions could work negatively on gold, which has not scored a major correction since last December. Nevertheless, assurances that reductions are coming could lead to a continuation of the path to the $3,000 per ounce level.
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
