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The dollar rises and stocks advance after the latest tariff threat
Dollar rose for the third consecutive session on Monday, after U.S. president Donald Trump warned about more tariffs including steel and aluminium. A gauge of global stock prices advanced, shrugging aside concerns over another round of duties. Trump is expected on Monday or Tuesday to announce 25% tariffs on U.S. imports of steel and aluminum, and will reveal other reciprocal duties shortly after. China's retaliatory duties on certain U.S. imports will take effect Monday. There is no sign that Beijing and Washington are making progress towards a new trading arrangement. The dollar index (which measures the greenback in relation to a basket of currency) rose 0.2%, reaching 108.30. Meanwhile, the euro fell 0.18%, at $1.0308. Marc Chandler, Bannockburn Global Forex's chief market strategist in New York said: "This is very early days." The market is just choosy and not really directional at the moment. The dollar gained 0.34% against the Japanese yen to 151.91, while the pound fell 0.37% to 1.2363. Shigeru Shiba, the Japanese prime minister, expressed optimism Sunday that his nation could avoid a tariff war with the United States and higher U.S. duties. The Canadian dollar fell 0.1% against the greenback, to C$1.43, and the Mexican peso was down by 0.2% versus C$20.607 as the greenback retreated from its earlier highs. Wall Street closed with gains, led by the tech and energy sectors. The S&P 500 Materials index increased 0.5%. Steel companies like Nucor and Steel Dynamics, both up 5.6% each, were the main contributors. After McDonald's reported its quarterly results, shares of the fast food restaurant rose 4.8%. Investors are saying: 'Hey let's get back to the areas that have worked.' Sam Stovall is the chief investment strategist of CFRA Research. He believes that earnings are one reason why investors remain optimistic. MSCI's global stock index rose by 4.16 points (0.48%) to 873.60. This is its fourth increase in five sessions. The STOXX 600 Index for Europe rose by 0.58%, closing at a new record high of $545.92. This was mainly due to a 1.5% increase in the oil and natural gas sector. Stocks of European steelmakers reversed their early declines. ArcelorMittal in Luxembourg, for example, closed 0.6% lower and Salzgitter in Germany, closed unchanged. Analysts are worried that tariffs will rekindle inflation in the United States, which would reduce the flexibility of the Federal Reserve, to lower interest rates. This is a potential outcome, and has supported the U.S. Dollar since Trump's election. According to CME's FedWatch Tool, the markets expect the Fed to keep rates unchanged at its meeting in March. Expectations for a rate cut of at least 25% basis points will not rise above 50% until June. The Fed chair Jerome Powell will be speaking to the Senate Banking, Housing and Urban Affairs Committee on Tuesday. It is likely that his comments on inflation and tariffs will be closely watched. Investors awaited new economic data, such as the latest consumer price reading and a wave of fresh supply. Oil prices recovered despite persistent fears of a global trade war. U.S. crude oil settled at $72.32 per barrel, an increase of 1.86%. Brent crude rose to $75.87 a barrel, an increase of 1.62%.
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Coffee sales in New York rise 6%, a new record high amid 'panic purchasing'
Coffee futures in New York increased by more than 6% Monday on the ICE exchange, reaching a new all-time record above $4.30 a pound. Some market participants cited panic in the market due to limited coffee availability. Arabica coffee futures have reached a new record for the thirteenth consecutive trading session. The new price peaks were fueled by reports of a hot, dry weather system that was forming in Brazil's coffee growing areas. Farmers are also reluctant to sell. Bob Fish, the co-founder and owner of Biggby Coffee in various states, said that prices would continue to increase. "There are two things that will stop this. One, Brazil and Vietnam having a good year of yield (which is not expected before August 2026). In a note he wrote about the rally, he stated that there was enough destruction of demand in the consuming countries due to the price hikes. Fish said that American coffee shops should raise their prices or face the risk of seeing their profits "evaporate". The coffee futures contract in New York is a benchmark for global prices. It hit a record price of $4.2410/lb before closing at $4.211/lb, up 6.2%. The spot contract that expires in march reached a high of $4.3195/lb. The prices are up about 35% this year, after skyrocketing 70% last year. Market concerns about the low stock levels in Brazil, a country that produces almost half of the world's arabica, are growing. Farmers in the area have already sold 85% of their current crop, and they are not looking to sell any more. A coffee broker said that the coffee in the balance sheet could be on the "wrong" side of the globe, at the hands strong Brazilian producers, suggesting that the farmers are well-financed in Brazil. Dealers claim that the rally has become a self-perpetuating phenomenon and is out of step with fundamentals. Icona Cafe, a trader, said that some people believe the Brazilian harvest next year could be better than anticipated. Not so much to surpass last year's but enough to brighten the outlook. Icona reported that Hedgepoint expects Brazil will produce more coffee than it did last year, estimating 64.1 million bags for 2025/26, compared to an estimated 63.4 millions for the previous season. ICE arabica speculators – who are driving the current price rise – have reduced their net long positions, or bets that prices will continue to increase, by 3,130 contracts, to 50,333 in the week ending February 4. Robusta, an alternative to arabica that is used to make most instant coffees, increased 2.4% to $5,697 per ton after reaching its highest level ever on January 31, at $5840. Other soft commodities were also traded. New York cocoa dropped 2.3%, to $9,878 per ton after a loss last week of 7%, and London cocoa was down 1.7%, to 7,919 pound per ton. White sugar futures increased 0.3% to $519.40 per tonne, while raw sugar futures increased 0.7%. (Reporting and editing by Andrea Ricci; Alison Williams, Mohammed Safi Shamsi and Marcelo Teixeira)
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FOREX Dollar gains slip, while others are affected by tariff threats
The U.S. Dollar gained on Monday, after President Donald Trump announced 25% tariffs on imports of aluminum and steel. Meanwhile, the Canadian dollar, Japanese Yuen, Euro and Sterling all fell on worries about any new trade levies. According to data from the American Iron and Steel Institute and government, Canada is one of the top exporters of steel and aluminum to the U.S. along with Brazil Mexico South Korea and Vietnam. The yen fell on fears that Japan might also be hit with tariffs. Marc Chandler, Bannockburn Global Forex's chief market strategist in New York, said that there is "a bit of catching up and this idea that perhaps Japan was going to avoid the worst and could now be hit with steel and aluminum tariffs." Shigeru Shiba, the Japanese prime minister, expressed his optimism on Sunday about the possibility of avoiding higher U.S. Tariffs. He said that Trump "recognised the huge investment that Japan has made in the U.S.A. and the American job that this creates." Trump announced on Sunday that he would impose new tariffs of 25% on all steel imports and aluminium exports to the U.S. on top existing metals duties. He had said that he would announce reciprocal tariffs with many countries on Monday or Tuesday. The Canadian dollar fell 0.11% against the greenback, to C$1.4307 a dollar after reaching $1.4379 earlier. The U.S. Dollar strengthened by 0.38%, to 151.97 Japanese Yuen. The dollar index increased by 0.21%, to 108.31. The euro fell 0.2% to $1.0305. The U.S. ranks second in the world for EU steel imports. The dollar fell 0.36%, to $1.2364 Britain Details have not been seen A spokesman for Keir starmer, the British Prime Minister, said that he was aware of President Donald Trump's proposal to impose steel and aluminum tariffs in the United States and would continue to work with him as necessary. The U.S. is Britain’s second-largest steel export market, after the European Union. The main focus of this week's U.S. economy will be the consumer price inflation figures for January, due Wednesday. According to economists surveyed by, both headline and core consumer price indexes are expected to have risen by 0.3% in the last month for a gain of 2.9% & 3.1% respectively. Jerome Powell, the Federal Reserve chairman, is due to appear before Congress on both Tuesday and Wednesday. Chandler said, "I believe Powell will tell Congress that, because the economy is still doing well, and is growing above trend, the Fed is given time." "The Fed is able to be patient as the restrictive monetary policies helps bring inflation down to its target over time." New York Fed's survey of the U.S. population on Monday revealed that their expectations for near-term inflation were mostly stable in January. Bitcoin gained 1.42% in cryptocurrencies to reach $97,378.84.
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What drives the gold market and how investors buy it?
Gold reached a record-high above $2,900 an ounce on Sunday as investors fled to the precious metal in fear of a global trade war sparked by U.S. president Donald Trump's recent tariff announcements. Bullion prices are up over 10% and have broken records seven times this year. Market bulls are now aiming for $3,000 an ounce, the next psychological barrier to be breached. Here are some different ways to invest in Gold: SPOT MARKET Big banks are usually the gold buyers for large investors and large buyers. The spot market is determined by the real-time dynamics of supply and demand. London has the largest influence on the spot gold markets, thanks to the London Bullion Market Association. The association establishes standards for gold trading, provides a framework for over-the counter trades, and facilitates transactions between banks, dealers and institutions. China, India, Middle East, and the United States, are also major gold trading centers. Futures Market Futures exchanges are another way for investors to get exposed to gold. They allow them buy or sell commodities at a set price, on a specific date in the future. COMEX, part of the New York Mercantile Exchange (NYMEX), is the world's largest gold futures exchange in terms of volume of trading. Shanghai Futures Exchange (China's largest commodities exchange) also offers gold contracts. Tokyo Commodity Exchange, also known as TOCOM is another major player on the Asian gold market. Exchange Traded Products Exchange traded funds or products that are backed by metal can be used to get exposure to gold without having to take delivery of it. Exchange traded funds are a significant category of demand for precious metals. The World Gold Council reported that physical gold exchange-traded fund holdings dropped by 6.8 tons in 2024. This was their first net inflow in 4 years. BARS AND COINS Metals traders can sell bars and coins to retail consumers in a store or online. Both gold bars and coins can be used to invest in physical gold. DRIVERS: Investor Interest and Market Sentiment The price of bullion has moved up due to the increased interest in investment funds over recent years. Market trends, global news and events can influence the sentiment that leads to speculation in gold. FOREIGN WAGE RATES Gold is an excellent hedge against the volatility of currency markets. Gold has historically moved in the opposite direction of the U.S. Dollar, since a weaker dollar makes gold priced in dollars cheaper for holders other currencies. MONETARY POLICY & POLITICAL TENSE In times of uncertainty, precious metals are widely regarded as a "safe-haven". Donald Trump’s trade tariff threats and the imposition of extra duties on Chinese products have sparked fears of an international trade war. They also rattled currency markets, and sparked fears of an increase in U.S. Inflation. Trump announced on Sunday that he would impose new 25% tariffs on steel and aluminum imports, along with reciprocal tariffs that target imports from many countries. The gold price is also affected by the decisions of global central banks. Gold is less expensive to hold when interest rates are lower, since it does not pay interest. CENTRAL BANK GLOBAL GOLD RESERVES Gold is part of the reserves held by central banks. The demand for gold by central banks has been high in recent years due to macroeconomic and political uncertainties. In its annual survey, conducted by the World Gold Council in June, it was revealed that more central banks intend to increase their gold reserves in the next year despite the high price of the precious metal. The World Gold Council reported that global gold demand including over-the counter trading rose by 1% in 2024 to a new record high. It also said that central banks increased their purchases in the fourth quarter. (Compiled and edited by Christina Fincher; Bangalore Commodities and Energy Team)
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The US copper premium has reached a record high after Trump tariffs
Copper prices in the United States soared Monday, after U.S. president Donald Trump announced his intention to impose tariffs on industrial metals. By 1820 GMT the premium between U.S. Comex Copper Futures and those traded on London Metal Exchange had risen to a new record of $920 per ton, up from $558 last Friday. Trump is expected to announce new tariffs of 25% on all imports of steel and aluminum, on top existing metals duties. This would be a major step in his trade policy shake-up. Last week, Trump announced that he would also impose tariffs against copper. He did not provide any details. Since Trump was elected president, Comex Copper has traded at a higher premium than the LME. This premium ranges from around $250 to $500, as investors tried to factor in the potential impact of tariffs. The gap widened on Monday, as traders scrambled in order to keep up with the news. Benchmark Minerals Intelligence stated in a report that "the price arbitrage between COMEX and LME reached an all-time record today, as traders continued pricing in the implementations of copper import tariffs into the US." It said that the premium implied the market was pricing the equivalent of a 10,5% tariff on Copper. Due to a short-squeeze, the Comex copper reached an all-time record of $5.1985 per lb in May 2024. During that time, the parties were forced to either buy back their short positions for a loss or to deliver actual copper to close them. (Reporting and editing by Tomaszjanowski, Polina Devitt and Eric Onstad)
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Ecuador's bonds tumble after election stalemate
Ecuador's government bond prices plunged Monday, after a tight result in the presidential election surpassed market expectations of a victory for Daniel Noboa. The center-right Noboa, and his main opponent, the leftist Luisa González, both secured 44% of the vote on Sunday, which means the race will now go to a second round on April 13. Analysts warned of the uncertainty in Quito. The main bonds for 2030, 2035, and 2040 fell between 5.0 to 10.6 cents per dollar or 8% to 16%. JPMorgan stated in a report that "we hold our excess in Ecuador, but we acknowledge the market may initially correct itself due to the perception of a greater binary risk." The performance of Ecuadorean bonds was among the best across all sovereigns. This is partly due to a more stable and effective government that Noboa established in November 2023 following a snap general election. The bonds rose 17% through Friday, after gaining nearly 70% at the index-level in 2024. Some polls had Noboa winning the first round. Noboa is the market's favourite candidate because of his efforts to combat violent drug gangs in Ecuador and long-standing debt problems, said Graham Stock. He's a senior emerging markets strategist at RBC BlueBay. Stock stated that "it is a very disappointing result for market" and added that Noboa's and Gonzalez's near 90% vote share meant the second round would be a "scramble". Leonidas Iza was the third-place candidate, an indigenous leader from the Pachakutik Party who received 4.8% of the first round votes on Sunday and had been critical of government environmental records. Tellimer Research analysts gave Gonzalez a slight edge in the run-off because they downgraded Gonzalez's debt to "sell", arguing that Gonzalez's coalition was more fragmented. Since the early 2000s, the country has not been able to access international capital markets. However, it recently completed its second high-profile swap of debt for nature with the support of the Inter-American Development Bank (IDB) and the U.S. Government's International Development Finance Corporation. Reporting by Marc Jones, Rodrigo Campos and Toby Chopra; Editing by Hugh Lawson, Toby Chopra and Sharon Singleton
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Trinidad increases revenue from LNG sales following contract revamp
Stuart Young, the energy minister of Trinidad and Tobago (the largest producer in Latin America and Caribbean) said that the government is generating more revenue through LNG exports. The cargoes are sold at a price between 15 and 55 percent above the Henry Hub, he added. After five years of negotiation, the increase is a result of a revamped contract in late 2023, which set new financial conditions for participants in Atlantic LNG, the country's flagship LNG project. Prior to the revamp, LNG production in Trinidad barely reached prices near Henry Hub for cargoes that were sold to customers throughout Europe, Asia, and South America. The country has pressed producers, particularly offshore, to deliver the first output of new projects in order to increase gas supplies to Atlantic LNG. A lack of gas has caused one of the liquefaction train's at the facility to remain idle in recent years. Young said that Shell's Manatee and BP Cypre are two of the most important gas projects offshore. Both are expected to produce up to one billion cubic feet of gas by 2028. Trinidad launched last month its largest ever auction of deepwater oil and natural gas exploration and production zones in an effort to ensure future output. The Trinidadian government hopes that the new administration under Donald Trump will preserve two important U.S. licences for joint projects in Venezuela, which are expected to provide gas for LNG production as well as exports from this Caribbean nation. As many European countries continue to impose carbon taxes on the import of petrochemicals, a larger revenue from LNG exports may help offset a predicted hit in sales of ammonia or methanol. Carbon taxes have been implemented in more than 20 European nations, mainly since 2023, to reduce carbon emission. David Cassidy said that the European Union has a unique decarbonization strategy. No one else is following it, he added.
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Minister says Colombian deforestation will be lowest in 23 years in 2024.
According to Environment Minister Susana Muhamad, the deforestation rate in Colombia is projected to increase in 2024 compared to the previous year. However, it is still expected to be one of the lowest rates in over two decades. According to the Environment Ministry, deforestation decreased by over a third, from 1,235 square kilometers to just 792 square km (305 square miles) by 2023. Muhamad warned last year that 2023's success would not be repeated due to drought and the breakdown of talks with rebels who, according to the government, are fueling illegal logging and road construction, as well as cattle ranching. Muhamad announced her resignation Sunday, but she has yet to be replaced. She led efforts to reduce deforestation, after the destruction of Colombia's Amazon ecosystem and other ecosystems increased during former President Ivan Duque's administration. Muhamad said that the figure for 2024 would be the lowest in 23 years. Muhamad said that her resignation was "irrevocable" over the appointment by President Gustavo Petro of a controversial advisor. Muhamad said that it is too early to speculate about her successor, but she and her team are working to prepare the ground for her successor. Muhamad is one of Petro's longest-serving cabinet members. She said that she was proudest of her work in deforestation, and the UN COP16 Biodiversity Summit, which took place in Colombia at the end of last year. The summit concluded with a plan that would charge pharmaceutical companies and other companies who use genetic information for the development and research of new commercial products. However, there was no agreement on how to raise $200 billion in annual conservation funding by 2030. Muhamad has said that she intends to stay in her position until the conclusion of the biodiversity talks, which will take place in Rome later this month. Reporting by Oliver Griffin Editing and Marguerita Choy
Aluminum prices rise on supply concerns after Trump tariff threat
Aluminum prices increased on Monday as a result of supply concerns after U.S. president Donald Trump announced he would impose new tariffs of 25% on all steel imports and aluminium.
The price of three-month aluminum on the London Metal Exchange rose by 0.3%, to $2,635 per metric ton at 0318 GMT.
Aluminium contract at the Shanghai Futures Exchange was 0.2% higher, at 20,530 Yuan ($2,809.71).
Trump announced on Sunday that he would impose new tariffs of 25% on all imports of steel and aluminum into the U.S. This will be in addition to existing metals duties. It is another major step up of Trump's trade policy overhaul.
Kyle Rodda is a senior financial market analyst at Capital.com. He said, "At this moment we're seeing signs that it could possibly put upward pressure on prices in the short-term just because of supply."
The global economy is affected by these tariffs.
Trump said that he would announce reciprocal tariffs Tuesday or Wednesday. They will take effect almost instantly, and apply to all countries, matching the tariffs levied by every country.
Federal Reserve officials said on Friday that the U.S. economy is doing well and emphasized the uncertainty over Trump's policies and how they will impact economic growth. They also noted the still-high inflation and the need to be cautious about cutting interest rates.
LME copper dropped 0.2%, to $9,393.5. Zinc was up 0.2%, at $2,844.5. Tin eased by 0.2%, to $31,040. Lead fell 0.2%, to $1,989.5. Nickel fell 0.1%, to $15,740.
SHFE copper rose 0.6% to 77.190 yuan. Nickel fell 0.2% at 126.870 yuan. Zinc was unchanged at 23,805 Yuan. Lead gained 0.4% and reached 17,165 Yuan. Tin gained 0.4%.
(source: Reuters)