While the tariff threat has slightly declined, markets remain skittish amidst continuing trade war worries, with the pound and euro performing strongly against the dollar.
Market Recap:
Volatility continued in foreign exchange markets, with the pound hitting its highest level against the dollar in seven months. The dollar’s slide is the result of continuing worries over the independence of the Federal Reserve (Fed) and the possibility of a global trade war.
The dollar regained a little ground against the euro after President Trump appeared to back down on his threat to fire Fed chairman Jerome Powell. Nevertheless, April has already seen the euro climb over 5% against the faltering greenback.
The European Central Bank (ECB) cut interest rates to 2.25% in a widely expected move. Eurozone rates are now at their lowest level since the beginning of 2023. Up to three more cuts are expected before the end of the year.
Traders will closely monitor President Trump’s statements this week for hints about the possible de-escalation of his trade dispute with China. The week ahead will also see quarterly results from a range of major companies, including Apple and Meta, and – in the US – early estimates of Q1 GDP growth.
