USD’s next direction depends on retaliation [Video]

Ipek Ozkardeskaya Swissquote Bank Ltd

Sentiment soured for both US, European and Asian markets. The US tech stocks were particularly hit – without a new catalyser. Investors continued to step out on tariff worries, and the worries got worse when Trump announced that he would impose 25% tariffs on auto imports... both finished cars and auto parts.

The bearish sentiment across the US equities is now expanding into the European equities. The massive government spending being already priced in, European equity investors are faced with the ugly truth of the hectic tariff policies.

Gold remains the most reliable hedge against the Trump tariffs.

The tariff talk’s impact on the US dollar has been surprisingly negative so far, but the dollar’s direction will likely depend on how the countries will respond to the US tariffs. If there is no retaliation, the US dollar could rebound on relief that the impact of the tariffs on American exports – hence the American growth - would be contained, while retaliation from the US’ biggest trading partners would further hammer the US growth prospects and weigh on the dollar.

Author

Ipek Ozkardeskaya

Swissquote Bank Ltd

Ipek Ozkardeskaya began her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high-net-worth clients.

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