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The dollar continued to decline on Monday as the US stock markets led a selloff driven by fears of a Trumpcession. Despite losses on the European stock markets, the euro ended up 0.4% up on USD and more than 0.45% up on sterling.
Trump’s on-again, off-again approach to tariffs has Wall Street spooked, with traders choosing to sell shares in US companies rather than wait and see whether the President will commit to his planned 25% import duties against Canada and Mexico. Over the course of Monday, Dow Jones, S&P 500, and Nasdaq were all down, with the latter leading the selloff, losing 3.5%.
Tesla was one of the standout losers of the day, with shares declining 11.8% in value, leaving Elon Musk’s electric car company stocks at 50% of December’s all-time high.
All this volatility and Trump’s apparent disregard for the danger of a recession, has seen traders continue to sell dollars and move their money to safer commodities At one point on Monday, the dollar hit a four-month low against the pound.
Later today, the US will post the latest JOLTs (Job Openings and Labor Turnover survey). These numbers already fell sharply in December, missing forecast job openings by more than 500,000, and they are expected to be down again today. But if they are lower even than the downgraded expectations it could further feed the fear of a Trumpcession.
After early gains on the dollar, perhaps driven by the UK government’s newly published Planning and Infrastructure bill failed to build momentum and the pound fell back through the day, ending Monday negligibly behind USD.
Today will see the markets respond to data released overnight showing major slowdown in the UK retail sector. As the cost-of-living continues to bite, retail sales only grew 0.9%, down from January’s 2.5%.
Despite last week’s successes, the Europe wasn’t immune to the US tumult, with Germany’s DAX, France’s CAC, and Italy’s FTSE MIB stock indices all down. The euro was also pushed down in the morning after German data revealed that exports had fallen and imports risen, leading to lowest trade surplus since last October.
However, with the sharpest of the pain being felt in the US markets, the euro continued to benefit, ending Monday up 0.4% on the dollar, and even higher on the pound.
With the German Green party vowing to block the historic debt deal incoming chancellor Friedrich Merz announced, any confirmation that it will go ahead or flounder will likely have a significant impact on the euro.
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GBP: Failing to find momentum
The pound ended Monday down 0.45% on the euro and slightly behind the struggling dollar. Poor overnight retail data is likely to impact the currency through today.
GBP/USD past year
EUR: Strong but not unharmed
The euro ended Monday up again on the dollar and the pound, but its stocks were harmed by Wall Street’s current panic. Europe is waiting to hear whether the German government can find unity on Merz’s historic debt deal.
EUR/USD past year
USD: On-again, off-again tariffs continue trouble
It was another bad day for the dollar, with Wall Street traders selling shares in the face of Trump tariffs. US jobs data published this afternoon will show the direction of travel for the US economy.
USD/GBP past year
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