The week has been relatively calm as the countdown to Trump’s tariffs begins, set for 2 April. Following slight gains, US futures are muted as market participants remain cautious.
Goldman Sachs has estimated the impact of tariffs and warned of a potential tariff shock next week. There are mixed views on the expected effects, with reports suggesting Mexico and Canada may be treated differently under the tariffs.
Currency Market Stability
Currently, major currencies are mostly stable, with the dollar maintaining its strength. The upcoming focus will be on the UK’s February CPI figures and the spring budget statement scheduled for 1230 GMT today.
Market sentiment will continue to be influenced by the risk outlook, especially as the month and quarter approach their ends.
The general steadiness in the markets this week suggests that traders are holding back ahead of what could be a turbulent period. The muted movement in US futures reflects a wait-and-see approach, where many are reluctant to take large positions until there is more clarity. Despite the moderate gains earlier, the looming tariff changes are keeping caution high.
Goldman Sachs’ assessment highlights the potential for a sharp reaction once these trade measures are enforced. If tariffs introduce unexpected constraints, it could lead to price distortions and shifts in supply chains. Concerns are rising that certain trading partners may receive exemptions, which would create an uneven economic response. While reports hint that Mexico and Canada might see preferential treatment, official confirmation is still lacking. This uncertainty is feeding into hesitancy across global markets.
Currency markets are showing no major fluctuations for now, with the dollar standing firm. Investors will be closely watching inflation data from the UK. The February CPI figures will offer more insight into consumer price pressures, which could influence expectations for future rate decisions. These numbers, alongside the spring budget statement, will determine whether fiscal or monetary adjustments are on the horizon. Depending on how policymakers react, volatility may follow.
Quarter End Positioning
With the final days of the month approaching, traders will need to account for movements related to quarter-end positioning. As portfolios are adjusted, there could be shifts in risk appetite. The overall environment remains tied to the broader uncertainty, meaning caution is likely to persist in the near term.
