Key Market Takeaways

- Trump-Era Tariffs Ruled Unlawful

A major international ruling found that tariffs imposed by the Trump administration breach global trade regulations, escalating concerns over potential retaliatory actions or future policy shifts.

- Initial Dollar Upswing Fizzles Out

The U.S. dollar saw a brief rally following the announcement, likely driven by safe-haven demand and knee-jerk positioning. However, the move quickly reversed as traders reassessed the broader implications for U.S. trade and policy credibility.

Market Recap:

• Dollar Demand Holds Firm The greenback is maintaining its strength, driven in part by routine month-end flows and renewed investor interest.
• U.S. Confidence on the Rise Consumer sentiment saw a notable improvement in May, signalling increased optimism about the economy. This has helped stabilize recent market jitters and support the dollar.
• Tariff Tensions Ease Easing concerns over tariffs on Chinese imports have improved the outlook for global trade, contributing to a rebound in equity markets and broader risk sentiment.

Today’s Market Update:

The U.S. dollar strengthened sharply overnight following a legal setback for the Trump-era tariff regime. The U.S. Court of International Trade ruled the former president’s tariffs illegal, triggering a 10-day window for their removal—though an appeal from the Trump camp is already in motion.

Highlights:

• USD Jumps on Tariff Ruling The greenback rallied as markets responded to the court’s decision against Trump’s trade tariffs. However, some of the early gains moderated as European trading began.
• Sterling and Euro Retreat, Then Stabilise Both GBPUSD and EURUSD dropped to their lowest levels in over a week before partially recovering during early European hours.
• Global Risk Sentiment Still Buoyant Equities continued their upward momentum, boosted by strong results from Nvidia, reflecting investor confidence in the tech sector and broader risk assets.
• Economic Data to Watch – Low Market Impact Expected Today’s releases of the second estimate of U.S. Q1 GDP and core PCE inflation are unlikely to shift markets significantly, as they are backward-looking.

💡 What This Means:

Markets are recalibrating expectations around U.S. trade policy, with legal uncertainty adding a fresh layer of complexity. While the tariff news gave the dollar a temporary lift, investor focus remains on broader risk trends and corporate earnings. For now, market mood is positive—but the appeal process and any political fallout from the tariff ruling will be closely monitored.

29th May 2025

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