Yen Gains, Gold Hits Peak as Tariff Uncertainties Lift Safe-Haven Bids

Uncertainty Clouds Economic Outlook as Tariffs Loom

Markets on Edge Ahead of New Round of Reciprocal Levies

The safe-haven Japanese yen gained on Monday, while gold pushed to a fresh peak, as uncertainty around tariffs clouded the outlook for US inflation and economic growth, keeping traders away from risky assets and the dollar.

Yen Strengthens as Uncertainty Grows

The yen strengthened to 148.7 per US dollar at one point on Monday, and was last 0.37 per cent stronger at 149.280. The Japanese currency rallied 0.82 per cent on Friday, when US data showed core inflation rose more than expected last month, fuelling fears of stagflation.

Gold Hits Record High as Investors Seek Safe-Haven

Gold pushed to an unprecedented US$3,128.06, marking three consecutive sessions registering record highs.

Euro Eases as Uncertainty Clouds Economic Outlook

The euro eased 0.11 per cent to US$1.0821, though it is set for a roughly 4.5 per cent rise this quarter, its biggest jump since the third quarter of 2022, thanks to Germany’s fiscal overhaul.

Tariffs on the Horizon

Markets are nervous ahead of a new round of reciprocal levies that the White House is due to announce on Wednesday. Details are scarce, but US President Donald Trump said late on Sunday that essentially all countries will be slapped with duties this week.

ECB Head Warns of Tariffs’ Impact on Eurozone Growth

The likely implementation of tariffs imposed by the United States means Europe will have to take better control of its future, European Central Bank (ECB) head Christine Lagarde said on Monday, reiterating the impact of tariffs and tit-for-tat measures on the bloc’s growth.

US Dollar Index Treads Water

The US dollar index, which measures the currency against six major peers, trod water at 104.01.

US Non-Farm Payrolls Data Due This Week

US non-farm payrolls data is due on Friday.

Goldman Sachs Raises Probability of US Recession

Goldman Sachs raised the probability of a US recession to 35 per cent from 20 per cent. It also projected three interest rate cuts each from the US Fed and the ECB from its previous expectation of two each.

Other Currencies React to Tariffs’ Uncertainty

The pound rose 0.19 per cent to US$1.2955 and is set for a nearly 3 per cent monthly climb – its best since November 2023. The Canadian dollar eased to C$1.4347 per greenback. Mexico’s peso slipped to 20.3808 per dollar. The Aussie eased 0.6 per cent to US$0.6252 on Monday, ahead of the Reserve Bank of Australia’s (RBA) policy meeting on Tuesday.

Conclusion

The uncertainty surrounding tariffs has sent markets into a frenzy, with the yen and gold benefiting from the safe-haven appeal. As the deadline for the new round of reciprocal levies approaches, investors are bracing themselves for a potentially volatile week.

FAQs

Q: What is the current state of the US dollar?
A: The US dollar index, which measures the currency against six major peers, trod water at 104.01.

Q: What is the impact of tariffs on the global economy?
A: Tariffs have the potential to roil the global economy, with the European Central Bank (ECB) head warning of the impact on the bloc’s growth.

Q: What is the probability of a US recession?
A: Goldman Sachs raised the probability of a US recession to 35 per cent from 20 per cent.