Markets closed out another tumultuous week flat on Friday, notably watching the US Dollar rally. Markets have been hit hard by the prospects of a global tariff war and the impact this will have on National economies. Predictions of a recession in the USA have been made, due to an international trade war, have begun to abate. The realisation that the trade war will be temporary, and economies will find a new equilibrium, is beginning to dawn. The all encompassing, ‘reciprocal tariffs’ will be global and relatively straight forward. This will offer nations the opportunity to cut current tariffs to US levels, or the US will act to equalise their tariffs, with all nations and their products/services. The complexity comes with the regulatory equalisation, as many Countries use regulation to impose trade restrictions. The US Dollar rally continues, with the EUR slipping back to 1.0800, while the GBP retreats to 1.2900.
The stronger reserve has halted the recovery in the commodity currencies, with AUD heading back towards 0.6250, while the NZD dipped under 0.5750. This coming week will focus on growth and inflation, while tariff and trade policy will remain a constant.
