Currency Markets Roiled by Tariffs and AI Uncertainty

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Global currency markets experienced sharp volatility as new U.S. tariff threats and concerns over artificial intelligence (AI) dominance shook investor confidence. The U.S. dollar strengthened against the yen and euro following President Donald Trump’s announcement of planned tariffs on key imports, including computer chips and steel. Market relief from Trump’s initial restraint on trade actions faded quickly, leading to whipsaw movements in foreign exchange.

The euro dropped 0.54% amid fears of escalating trade tensions, while the yen surrendered its earlier safe-haven gains. Traders also reacted to the emergence of Chinese startup DeepSeek’s AI model, which raised doubts about U.S. tech giants’ continued market leadership, causing a selloff in Nvidia and other chipmakers. Meanwhile, Treasury yields rebounded as markets recalibrated risk expectations ahead of the Federal Reserve’s policy meeting.

With Trump’s February 1 tariff deadline looming, analysts expect further market turbulence. Investors are also closely watching the Fed and European Central Bank meetings this week for potential rate moves. Sterling, the Australian dollar, and the New Zealand dollar weakened, while Bitcoin surged past $103,000. The financial world remains on edge as economic policies and AI advancements drive uncertainty in global markets.

Source: REUTERS

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