The US dollar rebounded from around 107.60 to the 108.40 level after the non-farm payroll report last Friday (February 7th), as the one-year inflation expectation in the US unexpectedly rose to 4.3% and the progress of Trump’s tariffs.
The number of non-farm payrolls in the US dropped significantly in January, but the unemployment rate also fell back to 4.0%. However, the one-year inflation expectation in the US rose from 3.3% to 4.3%. This directly boosted the US dollar index.
The US dollar rose against most major currencies after President Donald Trump said he would announce tariffs on steel and aluminium imports, triggering a new wave of enthusiasm for the reserve currency.
Trump said he would announce on Monday that a 25% tariff would be imposed on imported products, and the tariff would apply to all countries. After that, the currencies of Norway, Canada and Australia all fell against the US dollar.
Data from the U.S. Commodity Futures Trading Commission shows that although speculative traders reduced their bullish bets on the U.S. dollar in the week ending Tuesday, the derivatives market still has a large long position on the dollar, with the amount of bets reaching approximately 31.2 billion U.S. dollars. Meanwhile, the data indicates that in the week ending February 4, leveraged funds increased their bets on the euro and the Canadian dollar.
Billy Leung, an investment strategist at Global X ETFs, said: “The risk of tariffs escalating over time still exists. This could intensify the ongoing inflationary pressure, keep the Federal Reserve cautious about cutting interest rates, and reinforce the policy divergence factor that supports a stronger US dollar.”
Rodrigo Catril, a strategist at National Australia Bank in Sydney, said: “The Trump administration clearly intends to use tariffs as a negotiating tool and also as a strategic or restructuring means. We are still in a state of capital inflow. During a highly uncertain period, the US dollar is doing what it should do.”
Many steel and aluminium buyers and sellers had expected that they would not be able to prepare for any tariffs until at least March. During Trump’s first term, some oil companies were granted exemptions from metal tariffs.
Trump did not explicitly state whether metals imported from China would face double tariffs, as he has already imposed a 10% tariff on Chinese goods.
The proposed $14.1 billion acquisition of US Steel by Japan’s Nippon Steel has also stalled amid the introduction of steel tariffs. The deal was blocked by former President Joe Biden and opposed by Donald Trump.
However, on Friday, after meeting with Japanese Prime Minister Shigeru Ishiba, Trump said that Nippon Steel is currently considering investing in US Steel rather than directly acquiring the company. Trump told reporters on Sunday that Nippon Steel cannot own a majority stake in the US company.
Technical analysis:
Gold: Despite the dollar’s rise supported by inflation expectations, gold’s strength remains unaltered. We recommend a blue momentum break in the plugin today, directly executing a buy stop operation. At the same time, set a yellow zone. If it drops and refreshes liquidity, execute a buy operation again. For detailed positions, please consult the plugin.
(15-minute Gold Chart)
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Nasdaq: Last Friday, we arranged for the Nasdaq to perform a bilateral refresh of liquidity and then carry out a reverse operation. As expected, the price was blocked near 22,000 and then fell, but it also began to stabilize and rebound after dropping to 21,621. Today, we recommend a direct buy stop after the blue area’s momentum breaks through, and at the same time, set up a low-buy defense in the green demand zone. For detailed positions, please consult the plugin.
(15-minute Nasdaq Index chart)
If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg.
USD/JPY: After five consecutive trading days of downward adjustment, the price is now consolidating in the 151-152 range. For today’s trading, we suggest waiting for the price to break through the momentum contesting area and then attempt to place a buy limit order at 152.40 in the blue zone. For detailed positions, please consult the plugin.
(US-Japan 60-minute chart)
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Today’s key financial data and events to focus on:
21:00 National Economic Confidence Index of Canada
23:00 US Conference Board Employment Trends Index for January
