In a whirlwind of economic shifts and political maneuvers, traders are responding rapidly to a mix of weak US labor data, volatile trade policies, and fresh geopolitical tensions that are shaking the foundation of global financial markets. The Federal Reserve is now firmly in focus after the latest US jobs report revealed a significant weakening in labor market conditions, prompting traders to price in more than a 90% chance of a rate cut in September. Adding to the caution, factory orders in the US dropped by 4.8% in June, reversing a previously revised 8.3% surge. The contraction in manufacturing demand only deepens concerns about the resilience of the US economy as it navigates through political turbulence and unpredictable policy changes. Learn to trade with confidence through expert-led courses by MJFXM – your gateway to smarter trading.
One of the most pressing developments is President Donald Trump’s recent tariff escalation. Last week, he signed an executive order raising tariffs on dozens of nations, with rates ranging between 10% and 41%. The measure goes into effect on August 7 and adopts a tiered structure, keeping a 10% tariff for surplus-trading countries and applying a minimum 15% floor for those with deficits. These moves are part of a broader protectionist strategy that continues to unsettle markets. The US-China trade situation remains unresolved, with Treasury Secretary Scott Bessent stating that any extension of the 90-day tariff truce is entirely Trump’s decision. The uncertainty has driven risk-averse investors toward gold, as safe-haven demand picks up in an increasingly unstable global climate.
The US dollar, while still drawing modest demand, has paused its post-payrolls decline, limiting any strong bullish moves in gold. Investors are now watching closely for upcoming data, including the ISM Services PMI, for signs of where the economy and Fed policy may be headed next. Meanwhile, the oil market has taken a sharp turn. After a significant slide to five-week lows, oil prices rebounded on Wednesday as fears of supply disruptions escalated. Brent crude rose to $68.07 per barrel and WTI to $65.56, buoyed by US threats to impose tariffs on India in retaliation for its continued purchases of Russian oil. Trump’s warning that energy prices could be used as leverage against Russian President Vladimir Putin adds a layer of geopolitical tension, even as India has denounced the threat as unjustified.
OPEC+’s latest decision to boost output by 547,000 barrels per day in September has sparked concerns of oversupply, but it’s the geopolitical tension that’s currently holding investor attention. With the group already controlling nearly half of the world’s oil output, its aggressive push to reclaim market share, combined with trade rifts and shifting alliances, could create further instability. Market watchers are also eyeing US crude inventory data for signs of underlying demand strength, with early numbers suggesting a potential tailwind for oil.