President Trump has stated that tariffs on Canada, Mexico, and China would start today, asserting that manufacturers must build their car plants in the US to avoid such charges. This announcement follows comments suggesting potential changes to the tariffs by Commerce Secretary Lutnick.

Concerns over the impact of these tariffs are growing, with indications that they could harm economic growth, particularly in the US and its neighbours. Recent data showed a slowdown in manufacturing activity, increasing prices, and a dip in employment, reflecting the challenges posed by tariff uncertainties.

Us Dollar Performance

The USD has weakened overall, with the DXY index showing a correlation with its performance during Trump’s first term. There are no significant data releases expected in North America today, while other global markets react to ongoing trade challenges.

Trump’s push to have manufacturing brought back domestically has now moved from rhetoric to policy, with tariffs on several key trading partners taking effect. The reasoning is plain: build within the country or pay to bring goods in. It’s a message aimed at manufacturers, but the broader market is reacting as well.

Lutnick’s earlier remarks hinted that there might be adjustments to these tariffs, yet it appears the position has been firmed up instead. Investors watching for flexibility will need to reconsider their expectations. The most immediate effects are already being seen in economic indicators, where manufacturing growth has slowed, costs have risen, and job numbers have softened. These are not isolated occurrences but rather a reflection of the uncertainty stirred up by trade policies.

In currency markets, the dollar’s weakening is notable. The DXY index is behaving in a way that aligns with its movements during the early years of Trump’s first term. This correlation is important for traders looking ahead, as it suggests historical patterns may offer guidance on what comes next.

Market Reactions

No market-moving economic data is scheduled out of North America today, leaving traders to take their cues from external developments. With other economies adjusting to these trade changes, global reactions will dictate short-term sentiment. Those involved in derivatives should keep a close watch on shifting momentum, as these policies continue to shape pricing beyond immediate headlines.

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Trudeau has announced retaliatory tariffs amounting to $30 billion, with an additional $125 billion planned within 21 days. Canada will also file challenges under the USMCA and WTO, while discussions about non-tariff measures are ongoing with provinces.

He emphasised that Canada does not desire a trade war, arguing that the US government risks American jobs and sabotages its own agenda. Trudeau claimed that the legal basis for tariffs concerning fentanyl is inaccurate, as less than 1% of fentanyl and illegal immigration originates from Canada.

Canada’s Fentanyl Commitment

Statistics indicate a 97% drop in fentanyl flows from December to January, affirming that Canada has met its commitments. Trudeau expressed the challenges Canadians will face, promising additional support and maintaining that these tariffs should be temporary.

The announcement highlights a direct response to the measures imposed by the U.S. administration, showcasing that Ottawa is not retreating from economic confrontation. The scale of the planned countermeasures should not be underestimated. An initial $30 billion tariff package is already set, with a much larger wave—an additional $125 billion—expected within three weeks. These actions are not taken in isolation; legal avenues through the USMCA and WTO will also be pursued. Provincial governments are engaged in discussions regarding alternative methods that do not rely on direct tariffs.

Trudeau has made clear that Canada is not seeking economic conflict. Instead, he frames these tariffs as a necessity, arguing that the White House is ultimately undermining its own labour force and economic priorities. His remarks directly challenge the justification provided by Washington, particularly the claim that fentanyl and migration concerns warrant such measures. He presents data to discredit the reasoning behind the U.S. decision, pointing to a 97% reduction in fentanyl flows from December to January.

This shift in numbers is not insignificant. From a trading perspective, this suggests that Canada has fulfilled its pledged commitments on border controls. If these figures hold under further scrutiny, the narrative from the United States appears weaker when backed by empirical evidence. In response, assurances have been made that domestic support will be provided to those affected, reinforcing that these measures should not be treated as permanent.

Economic Adjustments And Market Reactions

For those closely monitoring price movements in the coming weeks, the immediate focus should be on reactions from Washington. There is no ambiguity in the scale of the measures, meaning response strategies will be developed swiftly. The timeline for the next wave of tariffs is clear, which provides some predictability in an otherwise volatile situation. The legal disputes under the stated agreements introduce potential delays, though market participants should not expect resolution through litigation alone.

This is not a theoretical confrontation; practical effects are already emerging. Importers and exporters will make adjustments, adding pressure on policymakers and industries alike. The determination to establish economic leverage on both sides is evident. The stated intention to limit the duration of these tariffs suggests that outcomes in negotiations could shift the timeframe, but that remains dependent on the ability of either side to recalibrate its stance based on economic repercussions.

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US Treasury Secretary Scott Bessent indicated plans to reduce interest rates, asserting confidence that Chinese manufacturers will absorb tariffs. Following these remarks, the US Dollar (USD) experienced a decline of 0.6%, bringing the USD Index to 105.95.

Tariffs, which are customs duties on imports, aim to protect local producers by creating a price advantage over foreign goods. They are paid at entry points, differing from taxes that are settled at purchase.

Impact On The US Dollar

Donald Trump intends to leverage tariffs to bolster the US economy ahead of the November 2024 election, focusing on Mexico, China, and Canada, which represent 42% of US imports.

Bessent’s comments on interest rates directly impacted the strength of the dollar, which dipped by 0.6%. This shift pushed the USD Index down to 105.95, reflecting changing expectations in financial markets. The reasoning behind this move appears to rest on the belief that Chinese manufacturers will absorb the added costs from tariffs rather than passing them on to American consumers. This assumption is an economic gamble; if incorrect, inflation could creep higher.

Meanwhile, tariffs remain a tool of economic strategy, designed to give domestic producers an edge over their international competitors. Unlike consumption taxes paid by buyers at the till, these duties are settled when goods enter the country. This difference affects pricing structures before products even reach the shelves, shaping both trade flows and corporate decisions.

Trump, focusing on economic positioning before the November vote, plans to rely heavily on tariffs. His targets—Mexico, China, and Canada—account for nearly half of all US imports. Such measures aim to protect manufacturing jobs and sway voters who view foreign trade as a threat rather than an opportunity. While they might boost certain industries domestically, they also risk countermeasures from trading partners, potentially causing friction in global supply chains.

Market Reactions And Risks

For traders in derivatives markets, recent developments prompt questions about interest rate movements and their effect on forex positions. Bessent’s stance suggests a shift towards monetary easing, which typically weakens the dollar. If this approach continues while trade barriers tighten, currency values could see further volatility.

Bond markets will likely reflect this balancing act, with yields adjusting to expectations of rate cuts. A weaker dollar tends to support commodities priced in USD, creating opportunities in those sectors. However, uncertainty surrounding tariff absorption should keep traders watching inflation indicators closely. If businesses pass costs to consumers instead of absorbing them, inflationary pressures could cause rate-cut expectations to reverse.

Those active in derivatives may need to weigh these risks carefully. Currency movements are not isolated reactions; they result from a web of policy decisions, investor sentiment, and economic data. If tariffs disrupt trade balances more than anticipated, market shifts could be abrupt. Reaction times will matter, and positioning ahead of expected policy changes may prove beneficial.

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In market developments, the S&P 500 has dropped by 1.9%, reflecting an overall trend of selling.

Market Reactions

Concerns remain that if tariffs are lifted by the 2028 election, relocated companies might lose their competitive advantage.

Trump’s remarks suggest a policy direction supportive of domestic manufacturing, which implies direct consequences for firms evaluating production sites. Button brings attention to obstacles businesses could face when considering such shifts. Moving industrial operations is not only about avoiding tariffs; supply chain resilience, workforce availability, and equipment costs play substantial roles.

A company like Ford, should it take such a route, must balance immediate financial gains with long-term efficiency. Any transition carries expenses that could offset tariff benefits. Decisions will not be purely political but depend on materials access, logistical ease, and existing local facilities. If trade policies shift in the next administration, those who moved operations hastily could face tighter margins.

Stock markets have reacted. With the S&P 500 falling 1.9%, investors appear to be adjusting portfolios to reflect greater volatility. The selling mood suggests that market participants have concerns about business profitability if factories relocate under possibly temporary trade advantages. A major factor is the risk that by 2028, any new incentives could reverse, rendering current decisions costly miscalculations.

Policy Considerations

Watching upcoming policy speeches is necessary. If leaders clarify measures that directly reduce logistical or manufacturing expenses beyond tariffs, more industries might commit to domestic moves. However, without firm legislative groundwork, businesses may hesitate to take costly steps that could be unwound within a single election cycle.

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NU Holdings Ltd. operates a digital banking platform across several countries, offering various spending solutions, including cards and mobile payment options. The company is based in Brazil and trades on the NYSE under the ticker “NU”.

Recent analysis indicates that NU may decline further after reaching a high of $14.08, with the potential for a drop below $10.18 to extend towards $8.10. This follows an impulse sequence that completed at a high of $16.15 after an upward trend beginning in June 2022.

Nu Holdings Price Movements

NU’s waves have experienced fluctuations, including a low of $10.18, a high of $14.08, and currently, it is expected to face a decline before a potential bounce. A break below $10.18 would reinforce this expectation, whereas maintaining above may indicate an alternate wave structure.

A buying opportunity is noted, should prices pull back between $8.10 and $4.40, aiming for future upward movement. Caution regarding trading in the Foreign Exchange market is advised; risks must be assessed relative to individual investment capabilities.

The pattern developing in NU Holdings Ltd. shares suggests traders should remain vigilant for further declines, particularly if the price breaks below $10.18. This threshold has previously held, but its failure would reinforce the likelihood of further downward movement. Current indicators show that the stock has already pulled back from its peak of $16.15, and if momentum continues, levels below $8.10 could come into play.

From our perspective, traders who focus on derivatives must manage risk carefully. If prices enter the anticipated range of $8.10 to $4.40, long positions could offer strong returns, given that historical movements suggest that such dips often precede rebounds. However, waiting for confirmation within these levels is key before taking a position.

Trading Strategy And Risk Management

A sustained move above $14.08 would suggest an alternative wave structure is forming, potentially invalidating a deeper pullback scenario. Therefore, those trading shorter timeframes should track whether price action holds within the expected decline—or whether a sudden surge challenges the outlined downtrend.

We recognise that speculative trades carry higher risks, particularly in stocks susceptible to large price swings. As such, capital management remains paramount, especially for individuals leveraging options or futures. Setting stop-loss levels aligned with personal risk tolerance will be necessary over the coming weeks.

While the stock has displayed long-term growth potential, short-term developments must be handled with discipline. Movements below key levels may set up opportunities, but traders should assess whether broader market trends and external influences align with their strategies before taking action.

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US two-year yields have decreased by 10 basis points to 3.87% as market participants seek safer investment options.

The S&P 500 has fallen below its January low, erasing all gains made since the election.

Currently, the S&P 500 is down 1.4%, the Nasdaq has declined by 1.3%, and the Russell 2000 has decreased by 1.6%.

Market Confidence Weakens

This movement in short-term Treasury yields highlights a growing preference for reduced risk. When investors shift their capital into government bonds, it often reflects uncertainty or a reassessment of expected returns elsewhere. The 10 basis point drop in two-year yields signals an increased demand for safe assets, suggesting that market confidence has weakened.

Equities continue to face downward pressure. The S&P 500’s decline below its January low indicates that prior optimism has been erased. It is not just a single index under strain—broad-based selling is present, with the Nasdaq and Russell 2000 also experiencing losses. The fact that the S&P 500 has given up all post-election gains adds to the argument that sentiment has turned more defensive.

In periods like this, price action becomes a key indicator. A 1.4% drop in the S&P 500, alongside a 1.3% dip in the tech-heavy Nasdaq, suggests that losses are not confined to one particular sector. Meanwhile, the Russell 2000’s 1.6% decline implies small-cap stocks are struggling even more. This points to a general aversion to riskier assets rather than a rotation within equities.

Potential Market Openings

Short-term swings could create openings, but momentum needs to stabilise before conviction returns. If safe-haven flows persist, further downside across equities may not be out of the question. Yield-sensitive assets will likely respond rapidly, especially if treasuries continue to attract demand.

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Gold’s price reached approximately $2,915 on Tuesday, following a more than 1% increase on the previous day. The rise is linked to US President Donald Trump’s confirmation of tariffs on Canada, Mexico, and China.

In response, Canada announced retaliatory tariffs of 25% on $30 billion of US imports, starting Tuesday. China plans to impose additional tariffs of up to 15% on key US agricultural products, effective March 10.

Us Treasury Yields Decline

US 10-year benchmark yields fell to 4.11% in early trading, marking a low not seen since mid-October. The market’s expectation of a Federal Reserve interest rate cut by June stands at 85.6%, driven by concerns over inflation and economic activity.

Technical analysis indicates tight trading ranges for gold, with daily Pivot Point support at $2,879. Resistance is noted at $2,903 and further at $2,917, while support at $2,866 could be vital to prevent further declines.

Gold’s surge past $2,915 has come on the back of tariff announcements from Washington, leading to retaliatory measures from Ottawa and Beijing. The confirmation of duties on goods from North America and China creates direct consequences for trade costs and profit margins, making commodities such as gold more appealing as investments shift towards safer assets.

These retaliatory moves will not just impact goods directly subjected to tariffs; they could also influence broader supply chains, pricing pressure, and corporate earnings. By introducing a 25% tariff on $30 billion worth of American imports, Canadian policymakers signal a hard stance. At the same time, Beijing’s decision to target major US agricultural exports with a 15% levy is set to create additional uncertainty, especially for sectors reliant on sustained trade stability.

Gold Price Support And Resistance Levels

The effect on US Treasury yields has been immediate—early trading saw 10-year benchmark yields drop to 4.11%, a level that hasn’t been recorded since mid-October. Lower yields make non-yielding assets such as gold more attractive, adding to demand. Meanwhile, bond markets appear to be locking in expectations for monetary policy adjustments, with rate cut probabilities exceeding 85% by June. That shift is largely due to concerns over economic activity and persistent inflation worries, which policymakers will have to address sooner rather than later.

Examining recent price action, technical indicators suggest that price movements remain confined within narrow bands. Current trading patterns show support forming around $2,879, with buyers stepping in at this level. Immediate resistance sits at $2,903, while a push beyond $2,917 could signal further upward momentum. Conversely, if prices fall below $2,866, we may see an extended retreat, forcing traders to reconsider their positioning.

For those navigating this situation, it is becoming clearer that external macroeconomic developments continue to play a decisive role. With trade measures escalating and monetary policy shifts growing more likely, markets could remain volatile in the coming weeks.

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Sheinbaum’s Strategy And Market Reactions

For traders, this is an essential development. The timing of the discussion—preceding the introduction of tariffs—means that any agreements, concessions, or shifts in policy could come swiftly. That, in turn, could affect market pricing notably. For those involved in derivatives, particularly with exposure to trade-sensitive sectors, this period requires close scrutiny. Reactions from businesses, policymakers, and markets will provide key signals, especially if signs emerge that tariffs may not proceed as planned.

If tariffs are implemented as scheduled, market responses will likely be triggered at the start of the week. But if talks lead to some form of delay or modification, price movements could begin even sooner. Markets tend to respond to expectations rather than just actions, meaning even an indication of flexibility in policy may shift investor positioning. Watching for leaks, early statements, or shifts in rhetoric could offer those trading derivatives an advantage in anticipating price fluctuations.

Trade Policy Volatility And Investor Strategy

Given the short time frame before tariffs take effect, decisions made now could affect pricing for the next several weeks. If there are sharp movements in expectations around trade policies, volatility could increase. That presents both risks and opportunities, depending on positioning. Clarity should emerge soon, but in the meantime, maintaining flexibility in strategy and monitoring developments carefully will be necessary.

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The Elliott Wave analysis of the Eurostoxx (SX5E) index indicates a bullish trend following a low on 19 November 2024. The index is currently unfolding as an impulse structure, with recommendations to buy on dips in defined price ranges.

Recent updates show that following corrections, a new high was achieved above 5544.12, suggesting further upward momentum. This trend aligns with earlier projections for a bounce after reaching the designated blue box area.

Currency Market Influences

Meanwhile, trading dynamics for currency pairs have been influenced by geopolitical tensions and tariff announcements. Notably, the AUD/USD remained choppy while EUR/USD climbed to new yearly highs amid a declining US Dollar.

The structural development in the Eurostoxx index suggests the ongoing bullish phase should persist as long as corrective declines hold within the projected retracement zones. The fact that it recently moved beyond 5544.12 confirms that the broader trajectory remains intact. Buying opportunities continue to exist when price retraces within identified support areas, as this pattern maintains its impulsive characteristics.

Attention must be placed on how each retracement unfolds. A sharp drop outside the expected levels would indicate a shift in structure, demanding a reassessment of potential targets. On the other hand, controlled pullbacks that respect Fibonacci retracement thresholds support the notion of a continuing rally. We have observed that previous corrections have been met with renewed buying pressure, strengthening confidence in the larger upward trend.

In the currency realm, recent conditions show that geopolitical factors remain key drivers of volatility. With the Australian Dollar experiencing erratic behaviour, it has provided little clarity for sustained positioning. Meanwhile, the Euro has displayed remarkable strength, benefiting from a broadly weaker US Dollar. The latest push to yearly highs underlines the advantage held by the Euro as long as the Dollar remains under pressure.

Risk Management Considerations

For traders navigating these movements, managing risk appropriately is paramount. While the current directional signals appear clear, external events, particularly those tied to tariffs and broader financial policies, have the potential to disrupt established patterns. Evaluating pullbacks carefully will be necessary, as they often present further opportunities when aligned with structural expectations.

The confluence of technical projections with fundamental influences suggests the present outlook remains constructive as long as the outlined conditions hold. That said, remaining flexible in response to new inputs will allow for adjustments if emerging price action deviates from anticipated scenarios.

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Three rate cuts by the Federal Reserve are anticipated this year. Although indications of a more accommodating Fed have been limited, St. Louis Fed President Musalem mentioned potential economic risks.

The Federal Reserve has maintained a ‘wait and see’ approach, emphasising the need for 2% inflation prior to any cuts. Meanwhile, the market has adjusted its expectations, pricing in 80 basis points of easing, a rise from 40 basis points previously.

Low Chances For March Cut

The chances of a rate cut in the upcoming March meeting remain low, while the May 7 meeting now has over a 50% likelihood. Additionally, a 50 basis points decline is projected for the terminal rate.

This suggests that while monetary easing is expected, there remains a gap between the central bank’s stance and market forecasts. Investors have grown more confident in lower rates arriving sooner, even though policymakers have not explicitly signalled the same level of urgency. Musalem’s mention of economic risks hints at growing concerns within the institution, but without definitive commitments, traders must closely monitor further statements.

Recent pricing shows a notable uptick in expectations, with projected cuts now doubling compared to previous estimates. This shift reflects a broader sentiment that the central bank will be pushed towards action, even as officials remain outwardly cautious. Inflation remains the primary hurdle, with authorities repeatedly stating that easing will only be considered if price stability is assured. Despite this, the likelihood of monetary policy adjustments later in the year has strengthened.

Market Expectations And Policy Shifts

With the upcoming March meeting, markets appear sceptical of any immediate change. However, by May, probability models suggest that more than half of market participants anticipate the first reduction. This adjustment aligns with growing views that policymakers will eventually move in response to slowing economic momentum or external pressures. Additionally, the expected decline in the terminal rate by 50 basis points further reinforces the belief that tightening measures will be reversed at a faster pace than initially forecasted.

Participants should monitor official commentary for any hints of a shift in stance. Inflation data releases and employment figures will be key in shaping upcoming adjustments. If economic conditions warrant it, policymakers may reconsider their cautious approach, accelerating the anticipated easing cycle. These developments will have direct implications for pricing, volatility, and positioning in the near term.

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