Global FX Market Summary: The Impact of US Trade Policy and Tariffs , Economic Data and Market Expectations 8 August 2025

US tariffs, central bank shifts, and economic data spark dollar volatility, gold rally, and market uncertainty amid global trade tensions.

The Impact of US Trade Policy and Tariffs

US trade policy, particularly President Trump’s use of tariffs, is a central theme with widespread effects on global markets. The US government imposed a 25% tariff on Indian imports, a move attributed to India’s continued purchase of Russian oil. The US also threatened to impose a similar tariff on Chinese excellents for the identical reason. Furthermore, the US announced a 100% tariff on semiconductors and chips that are not manufactured domestically, and a new tariff on one-kilogram gold bars, which significantly impacts Switzerland, the world’s largest gold refining hub. These tariffs and threats have created economic uncertainty, contributing to a fragileer US Dollar and renewed concerns about a potential global trade war, while also fueling a rally in the price of Gold.

Central Bank Monetary Policy and Leadership

The monetary policies of major central banks and potential changes in their leadership are a key factor influencing currency and asset values. The Bank of England (BoE) cut its policy rate by 25 basis points, but the decision was considered a “hawkish surprise” because the vote was a narrow 5-4 split and had to be repeated. This outcome led to a strengthening of the British Pound, which rose more than 0.6%. Meanwhile, the US Federal Reserve (Fed) is widely expected to resume its rate-cutting cycle, with traders pricing in a more than 90% chance of a cut in September, a sentiment driven by softening labor market data like the rise in jobless claims to 226,000. Speculation about who will replace Fed Chairman Jerome Powell is also affecting markets, as news that Christopher Waller, who favors lower interest rates, is a top candidate caused the US Dollar to strengthen.

Economic Data and Market Expectations

Economic data releases and the expectations surrounding them are a major driver of market movements. The weekly Initial Jobless Claims data in the US is a key focus, with a reading below 210,000 expected to support the US Dollar, and a reading above 230,000 potentially having the opposite effect. In Canada, markets anticipate moderate job growth and a slight increase in the unemployment rate to 7% in July. The Bank of Canada (BoC) is expected to maintain its current interest rates, as this data is not viewn as significant enough to alter its wait-and-view stance. Furthermore, global trade data, such as China’s crude oil imports rising by 11.5% year-on-year and copper imports increasing by 9.1% year-on-year, indicates strong domestic demand for industrial metals despite the uncertain global trade environment.

Top upcoming economic events:

Thursday, October 23, 2025 · National CPI ex Fresh Food (YoY) for Japan * Dates: October 23, 2025 at 23:30:00 JST (Local Time) * Importance: This measure of inflation is crucial for the Bank of Japan (BoJ). By excluding the most volatile food component, it provides a clearer look at underlying price pressures. Sustained high readings are necessary for the BoJ to consider a shift away from its ultra-loose monetary policy, which would have a significant impact on the Japanese Yen (JPY).

Friday, October 24, 2025 · RBA Governor Bullock speech for Australia * Dates: October 24, 2025 at 00:05:00 AEDT (Local Time) * Importance: Speeches by the head of the Reserve Bank of Australia (RBA) are highly impactful. They offer direct insight into the central bank’s current economic outlook, assessment of inflation risks, and potential forward guidance on interest rate policy, which is a primary driver of the Australian Dollar (AUD).

• Retail Sales (MoM) for the United Kingdom * Dates: October 24, 2025 at 06:00:00 BST (Local Time) * Importance: This is a key measure of consumer demand, which is the backbone of the UK economy. Stronger-than-expected sales suggest economic resilience and potentially higher inflation, which could pressure the Bank of England (BoE) to maintain or hike interest rates, causing volatility for the British Pound (GBP).
• HCOB Composite PMI for the Eurozone * Dates: October 24, 2025 at 07:30:00 CEST (Local Time) * Importance: The Flash Composite Purchasing Managers’ Index (PMI) is a leading indicator of economic activity across both the manufacturing and services sectors. A reading above 50 signals expansion, while below 50 signals contraction. It is a critical, up-to-the-minute gauge of Eurozone health for the European Central Bank (ECB) and the Euro (EUR).
• HCOB Manufacturing PMI for the Eurozone * Dates: October 24, 2025 at 07:30:00 CEST (Local Time) * Importance: As a major component of the Composite PMI, this report specifically tracks the health of the Eurozone’s industrial sector. It is closely watched for signs of global demand and its impact on the region’s economy and the Euro (EUR).
• HCOB Services PMI for the Eurozone * Dates: October 24, 2025 at 07:30:00 CEST (Local Time) * Importance: The services sector is the largest part of the Eurozone economy. This index measures business confidence and activity, providing a leading indicator of domestic demand and potential inflation, making it highly influential for ECB policy and the EUR.
• S&P Global Services PMI for the United Kingdom * Dates: October 24, 2025 at 08:30:00 BST (Local Time) * Importance: Given the UK’s service-heavy economy, this PMI is a very significant, forward-looking indicator of business conditions, employment, and pricing power. It is a key data point for the Bank of England (BoE) when formulating monetary policy, thus impacting the GBP.
• Consumer Price Index (YoY) for the United States * Dates: October 24, 2025 at 12:30:00 EDT * Importance: This is the headline inflation report for the US. It is a top-tier event globally, as the Federal Reserve (Fed) uses inflation data to guide its interest rate decisions. Any significant deviation from forecasts can cause major volatility for the US Dollar (USD) and global markets.
• Consumer Price Index ex Food & Energy (YoY) for the United States * Dates: October 24, 2025 at 12:30:00 EDT * Importance: Known as Core CPI, this measure excludes the volatile food and energy sectors to show the underlying, more persistent inflation trends. The Core CPI is the Federal Reserve’s preferred measure of inflation for long-term monetary policy decisions, making it critically significant for the USD.
• S&P Global Services PMI for the United States * Dates: October 24, 2025 at 13:45:00 EDT * Importance: Similar to other large economies, the service sector dominates the US economy. This report provides a quick and accurate assessment of the sector’s health, which includes employment and new business. It offers a timely glimpse into US economic momentum and influences expectations for the Fed’s policy trajectory, impacting the USD.

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