New duties, coupled with the tariffs on steel and aluminum that are now also levied on Canada, Mexico and the EU, created an environment of uncertainty that caused a sense of disruption and worry among investors, as well as, central bankers across the globe.

The effects of this uncertainty could be seen across financial markets on Monday. Assets perceived by investors as ‘risky’ such as, global stocks and emerging market currencies, were sold-off and assets on the opposite side of the spectrum such as, safe-haven currencies (JPY, CHF), increased in value. However, during the New York session most such assets reversed course, to end the day near unchanged.

Sterling extends losses, EUR/USD remains flat

The British currency extended losses on Monday, falling against both the Euro and Dollar. The currency is still weighed down by Brexit negotiations, weak macroeconomic data and the Bank of England’s delay of rate increases, but recently suffered mostly because of Dollar strength. GBP/USD started the week close to this month’s lows. It is unlikely that we’ll see a large turn this week, unless the BoE surprises to the upside on Thursday. Investors will mostly be looking at the vote distribution, they expect 7-2 in favor of maintaining the current level of interest rates. If additional members decide to take a hawkish turn and vote for an immediate hike, Sterling will likely strengthen.

The Euro trade-weighted index rebounded slightly on Monday, rising by 0.2%, but because of the similar move in the Dollar, the main currency pair remained largely unchanged. The common currency suffered over worries of a possible German CDU/CSU coalition breakup, over disagreements on the topic of immigration. Angela Merkel was given two weeks to resolve the issue of asylum on the European level and, at this point, it seems likely that the two parties will find a common ground.

With no major economic news from main economies over the next few trading sessions, investors will await Thursday’s Bank of England meeting and Friday’s PMI prints for Euro Area and the US.