This Week: USDInd surges towards 2-year high on US tariffs announcement

 

• Trump tariffs on Canada, Mexico, China start Feb 4
   
• US dollar surges towards 2-year high
   
• Alphabet, Amazon earnings may sway US500 index
   
• BoE likely to cut rates, Pound may weaken
   
• US jobs report to test labor market resilience

 

February is already off to a cracking start!
 

Over the weekend, President Trump announced the rollout of tariffs on Canada, Mexico, and China starting Tuesday, Feb 4th.

Today, the US dollar surged towards its 2-year high around 110.0, putting pressure on the rest of the FX universe, while cryptos and stock indexes also tumbled.

Gold pulled back lower from a record high, while oil moved above $76.00.

 

But there’s more market action ahead!

This week also features the Bank of England’s rate decision, Big Tech earnings from Amazon and Alphabet, and the ever-pivotal monthly US jobs report.

With so many market-moving events lined up, traders will be spoilt for potential opportunities in days ahead.

 

Events Watchlist:
 

• Tuesday and Thursday, Feb 4th and Feb 6th: Alphabet and Amazon earnings

Alphabet - Google’s parent company - is set to unveil its earnings after US markets close on Tuesday, while Amazon will follow suit after US markets close on Thursday. On the day following their respective announcements, Alphabet stocks are forecasted to react with a 5.7% move up/down on Wednesday, while Amazon’s share price reaction could be 6% up/down on Friday.

If these tech giants deliver positive surprises, especially around cloud services for AI, that could restore the US500 index above the 6,000 level, given Amazon and Alphabet’s massive market caps: US$2.47 trillion each.

 

• Thursday, Feb 6th: Bank of England (BOE) rate decision

The BOE is widely expected to cut rates by another 25-basis points in February – anything else would be a shocker. Further out, markets predict a further two rate cuts (25-bps each) for the rest of 2025. Policymakers may be biased towards offsetting economic/labour weakness, especially given the threat of a looming global trade war, and bear with still above-target inflation in the interim.

Signs of more/faster BOE rate cuts in 2025 could weaken the Pound and push GBPUSD towards the lower end of the 1.2082 – 1.2429 forecasted range this week, with the 1.2000 big, round number a tantalising target for bears.

 

• Friday, Feb 7th: US January nonfarm payrolls (NFP)

Economists predict that the US labour market added 170,000 new jobs in January, far below December’s 256k figure. Perhaps more crucially, the unemployment rate is expected to stay rooted at 4.1%.

If the US jobs market again showcases its resilience, which in turn further pares bets for Fed rate cuts, that should see the US dollar index (USDInd) posting a new 2-year high above the psychological 110.0 mark.

 

 

Here’s a comprehensive list of other key economic data and events due this week:
 

Monday, February 3

• AUD: Australia December/4Q retail sales; January Melbourne Institute inflation
   
• CNH: China January manufacturing PMI
   
• JPY: Bank of Japan meeting minutes
   
• EUR: Eurozone January CPI
   
• RUS2000 index: US January ISM manufacturing
   
• USDInd: Speeches by Atlanta Fed President Raphael Bostic; St. Louis Fed President Alberto Musalem
   
• OPEC+ Ministerial meeting
   

Tuesday, February 4

• US400 index: US December factory orders
   
• USDInd: Speeches by Atlanta Fed President Raphael Bostic; San Francisco Fed President Mary Daly
   
• US500 index: Alphabet earnings
   

Wednesday, February 5

• NZD: New Zealand 4Q unemployment
   
• CN50 index: China January services, composite PMIs
   
• SG20 index: Singapore December retail sales
   
• EU50 index: Eurozone December PPI
   
• USDInd: Speeches by Chicago Fed President Austan Goolsbee and Richmond Fed President Tom Barkin
   

Thursday, February 6

• AU200 index: Australia December trade balance
   
• GER40 index: Germany December factory orders
   
• EU50 index: Eurozone December retail sales
   
• GBP: Bank of England rate decision
   
• MXN: Bank of Mexico rate decision
   
• US400 index: US initial weekly jobless claims; speech by Fed Governor Christopher Waller
   
• NAS100 index: Amazon earnings
   

Friday, February 7

• TWN index: Taiwan January CPI, PPI, trade balance
   
• EUR: Germany December industrial production, trade balance
   
• MXN: Mexico January CPI
   
• US500 index: US January nonfarm payrolls; February consumer sentiment
   
• CAD: Canada January unemployment
  
   

US Dollar Index US Dollar USDInd Donald Trump Tarrifs Alphabet Amazon Earnings BoE NFP Nonfarm Payrolls OPEC+