The People’s Bank of China has kept its benchmark interest rate at 3%. This choice matches what experts expected amid global economic uncertainty. The Australian dollar rose after the US dollar weakened due to tensions with Greenland. The GBP/USD exchange rate remains stable around 1.3450 as traders wait for labor market data from the UK.

The Japanese Yen Intervention Fears

The Japanese yen has gained strength due to fears of intervention and a flight to safety. Meanwhile, the EUR/USD is testing a nine-day EMA level close to 1.1650. Silver prices have fallen to around $93.50 as traders take profits after hitting a record high. The USD/CAD is steady above 1.3850, as the Canadian dollar weakens due to lower oil prices. Gold has inched up, approaching $4,670, thanks to safe-haven demand amid global tensions. Ethereum shows mixed trading with increased network activity affecting its price. Tariff issues are in focus, with unexpected geopolitical events causing market volatility. Meme coins like Dogecoin, Shiba Inu, and Pepe have declined, following Bitcoin’s drop of about 3% on Monday.

Dominant Market Driver

The unexpected tariff situation between the US and Greenland is the main market driver, creating significant uncertainty. The CBOE Volatility Index (VIX) has jumped above 35, reflecting fear similar to the banking crisis in 2023. Traders are being advised to buy protection as sharp price fluctuations are expected in the coming weeks. China’s choice to keep the interest rate at 3% offers a bit of stability but won’t calm anxious markets. This is the fourth straight meeting with steady rates, a cautious approach reminiscent of the tough post-pandemic recovery period of 2024. While this removes one potential worry, it keeps the focus on the geopolitical issues causing volatility. The main response has been a rush to safety, driving gold prices toward $4,700 an ounce. After years of high global inflation, with average CPI figures above 4% in 2024 and 2025, investors were already anticipating higher precious metal prices. This geopolitical shock is speeding up that trend, with some bets on gold reaching $5,000. In currency markets, the US dollar is weakening as traders look at the potential fallout from the new tariff policies. We’re closely monitoring key pairs like GBP/USD, especially with UK labor data upcoming, where unemployment has stayed at a stubborn 4.5% for two quarters. A strong report could lead to more dollar selling and push the pound higher. At the same time, riskier assets are being sold off aggressively, as seen by the sharp decline in meme coins and other speculative cryptocurrencies. This is a classic risk-off scenario similar to the broad market sell-offs of 2022 when the most volatile assets were the first to go. We anticipate increased demand for put options on tech indexes as traders prepare for more potential losses. Create your live VT Markets account and start trading now.

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