Tariffs Tighten, Currencies Twist

Gold surges, forex shifts, and global tensions redefine trading strategy this month.

Global News & Macro Themes

• Global news and macro themes are shaping markets this month. The U.S. and India have escalated tariffs, doubling them to 50% and impacting over $20 billion in trade, which may cause volatility in INR currency pairs and export equities. Markets are also anticipating a 0.25% Federal Reserve rate cut, and the DXY has weakened by 2% over the past five weeks. Geopolitical flashpoints include warnings from the UN about a humanitarian collapse in Sudan and Yemen, the condemnation by the UN of Israeli military escalation in Gaza, and increased scrutiny of the Trump administration regarding Fed independence and immigration raids.

Forex Market – Cautious Optimism & Diverging Trends

• The forex market shows cautious optimism amid diverging trends. EUR/USD has risen 0.4% this week, supported by strong Eurozone GDP growth of 0.5%. GBP/USD has declined 0.5%, pressured by concerns over stagflation in the UK, with CPI at 3.5%. USD/JPY has experienced a slight appreciation of the yen, gaining 0.3% as U.S. Treasury yields shifted. AUD/USD has increased by 0.6%, buoyed by commodity strength and the hawkish tone from the Reserve Bank of Australia

Seasonal Trends

• Seasonal trends are also influencing the forex market. Historically, September tends to be bullish for EUR/USD, with an average return of 0.63%. Conversely, GBP/USD typically weakens in September, showing an average decline of 0.37%. USD/JPY faces seasonal softness during this period, although technical support levels remain intact.

Gold Market – Record Highs Amid Policy Uncertainty

• Gold surged to an all-time high of $3,700 per ounce on COMEX, driven by investor positioning ahead of the U.S. Federal Reserve’s expected rate cut, and this rally is unusual as it occurred despite low asset volatility and a steady dollar.
• Key Drivers:
  • Speculative demand and central bank independence concerns
  • Fed expected to cut rates by 25–50 bps on Sept 17
  • Strong demand for physical gold and ETFs, though speculative futures remain moderate
• Silver outperformed, hitting $41.46/oz, with a tightening Mint Ratio of 86.4:1.

 Strategic Takeaways for Traders & Analysts

• Gold continues to serve as a strategic hedge rather than just an inflation shield, and traders should watch for dips as potential buying opportunities. Forex volatility is rising, particularly in GBP and AUD pairs, creating ideal conditions for tactical plays. Global risks remain asymmetric, as policy uncertainty, trade tensions, and questions about central bank credibility are reshaping asset correlations.