Currency markets continue to react to the fallout from shifting global sentiment. The US Dollar Index remains pinned near three-year lows as the greenback struggles to find its footing.

The Japanese yen was relatively quiet in early trade. The Bank of Japan is now expected to hold its key interest rates at current levels at its next meeting, rather than announcing an increase as had previously been forecast.

Sterling continues to climb. The GBP/USD traded above 1.3200 this morning, hitting a fresh seven-month high. UK-US trade relations are viewed as amicable despite wider geopolitical friction. This morning’s UK jobs data were relatively benign, and the better-than-expected Average Earnings Index added to hopes that inflation was heading back towards the Bank’s 2% target rate.

The New Zealand dollar jumped for a fifth straight day, extending its recent rally. Investors appear to have been caught off guard by the scale and speed of the dollar’s decline, and the euro’s rise has only added to the recalibration.

A Bank of America survey showed that 61% of respondents remain bearish on the US dollar over the next 12 months, reinforcing the idea that sentiment has shifted decisively.

Gold continues to trade just shy of its all-time highs as investor appetite for safe havens remains strong. The metal's upside momentum remains intact despite a lack of immediate headlines to push it up further, although it is looking overbought when considering its daily MACD. Silver was little changed in early trade and, unlike gold, remains well below its all-time high of around $50 from April 20211.

Oil has continued to consolidate this morning. Front-month WTI was trading around $61, having rallied off the four-year low of $55 per barrel hit last week. Chinese import data helped to boost demand expectations. The tone around crude has firmed in recent days, though traders remain cautious given broader macro risks.

Natural gas is also mildly higher, possibly attracting some dip-buying interest after its recent slide.

Crypto markets were firmer in early trade, reflecting the day’s steadier tone across broader financial markets. While volatility hasn’t disappeared, today’s price action suggests a wait-and-see approach from traders.

The VIX was hovering around 30 this morning, just marginally higher from yesterday. While off recent highs, this still reflects ongoing market anxiety. The index remains well above historical norms and continues to act as a barometer of sentiment around tariffs and monetary policy.

A busy day for economic data includes UK jobs, Germany’s ZEW survey, Canadian CPI, US imports, and the New York manufacturing print. While not likely to be market-moving in isolation, these data points could influence broader trends if they are significantly surprising.

Earnings are also front and centre, with Citigroup, Bank of America and consumer heavyweight Johnson & Johnson all reporting. Each carries implications for stock sentiment, sector rotation, and Dow direction.

Elsewhere, G7 finance ministers are set to meet in the US, with trade and fiscal stability expected to dominate the agenda.

Consumer confidence continues to flag, with Americans expressing rising concern over the economy’s health. The White House insists everything is fine, though sentiment remains fragile.

Apple has regained its $3 trillion market cap, bolstered by recent price momentum and broader tech sector strength.

The US has launched a probe into chip and electronics imports, another sign that tariff and tech policy may remain top of Washington’s mind.

Meanwhile, Goldman Sachs estimates 500,000 job losses linked directly to tariffs as policymakers and analysts weigh the real-world impact of protectionist measures.

Fed speakers were back on the wires yesterday, with Waller calling tariffs the biggest shock to the US economy. On the other hand, Bostic maintained that inflation remains far above target, suggesting continued hawkishness at the margin.

UBS has cut its China GDP outlook, while Morgan Stanley and Citigroup have slashed their 2025 earnings estimates for US corporates. Deutsche Bank now expects a single 25bps Fed cut in December, down from more aggressive expectations seen earlier this year.

Markets appear calm — for now. But as we’ve seen repeatedly, sentiment can shift quickly. The dollar remains under pressure, and investors are still considering the implications of Trump’s tariff moves.

Gold seems to be biding its time, while oil and crypto may have found a short-term floor — though conviction remains thin. Overall, it’s consolidation time as investors sit on their hands ahead of fresh tariff news.

Tariffs, earnings, and macro data will continue to jockey for attention. For now, the market is choosing to adopt an optimistic outlook. But with so many moving parts in play, the question remains: how long can the calm last?