Global Market Tensions Rise Amid U.S. Tariff Threats

The Japanese yen and gold surged as market uncertainty loomed over impending U.S. tariffs. With potential economic repercussions, global currencies fluctuated, and the U.S. dollar held steady. Analysts predict challenges ahead as tariff implementations could affect global trade and economies, particularly with upcoming U.S. economic data releases.

The Japanese yen appreciated against the U.S. dollar on Monday, reflecting rising market concerns triggered by possible new tariffs from the United States. Gold also reached new heights, becoming a safe haven for traders avoiding risky assets amidst the clouded outlook for U.S. inflation and economic growth.

On Monday, the yen strengthened to 148.7 per U.S. dollar before slightly settling. U.S. economic data revealed core inflation surpassed expectations, fuelling fears of stagflation. Jane Foley, Rabobank's head of FX strategy, cautioned that uncertainty won't dissipate with Wednesday's anticipated tariff announcements.

Global markets remain tense as Goldman Sachs raised the U.S. recession probability to 35%. The upcoming reciprocal tariffs may prompt Europe to assert more control over its economic future, echoing warnings from ECB President Christine Lagarde. Meanwhile, U.S. non-farm payrolls data due Friday adds to market anticipation.

(With inputs from agencies.)