Tariff Clarity Still on Hold

Digest: Market Fluctuations & Tariff Tease

Where We Stand

Yesterday was day two of the so‑called “golden age” – or, as many of us call it, day two of standing by to see President Trump unveil his next mind‑bending trade plan. Unfortunately, clarity is still playing hard to get.

With only a soft hint that new tariffs on Canada and Mexico could hit the market on February 1, the dollar wallowedded a bit. Who can blame the yen? It’s like watching a roller‑coaster that’s missing its chain: you can feel the anticipation, but you’re not sure if you’ll actually get anywhere.

Investor Playground: Dollar and Volatility

Dollar Dips – Yes, Please! The USD’s recent loud pop back in late October is likely a case of mean‑reversion. Still, those of us who like to ride a ball‑back trend might find this dip an opportune moment to cash in.
Volatility Remains On‑High The market’s uncertainty is as thick as a summer soup. That means the VIX could well stay north of 20 – not hovering around the “comfortable” 15 we’ve seen in recent years.
Wall Street’s “Happy” Loop The incoming administration wants to keep the Dow smiling, because it’s a pretty handy yardstick for evaluating his own popularity. A steady stream of solid earnings should keep the bounce alive – even if the “Fed put” is now a thing of the past.

What’s Happening Beyond the U.S.?

Japanese Yen – The yen found a firmer footing, flirting with the 155 mark. Bank of Japan insiders hint at a rate hike, but the real drama will be in Ueda’s next statement. A hawkish tone might affect the yen only if it clashes with the looming U.S. tariff saga.
Will the JPY dance or weep?
Europe – Germany’s Gloom and the Euro’s Resilience – The ZEW sentiment dropped to 10.3, a record low, but the euro stayed above 1.04 for most of the day. Looks like we’re bumping into the “peak pessimism” threshold at last.
UK’s Tug‑of‑War – The BM rate cuts are still on the table, but high pay growth (5.6% YoY) is making the Bank of England’s 2% inflation goal a daunting climb. The schedule of 25‑bp cuts might just keep rolling.

Looking Ahead

Today keeps it low‑key: just the latest UK public‑borrowing data and a 20‑year U.S. note supply. But all eyes will still be on Washington for any new political twists that could flip the market fast.