In such an environment, it's entirely unclear what his next move might be.

His actions regarding tariffs on Canada and Mexico resemble mere threats. It's likely that he won't change them, aiming to get what he wants in both the economic and immigration spheres. At the same time, the 10% increase in import quotas for China is not critical. As previously mentioned, Trump appears to be inflating conflicts in his preferred business style: apply pressure to get what you want. One could argue that all his threats are merely a geopolitical game, albeit an extremely dangerous one.

After softening rhetoric towards Mexico and Ottawa, the dollar came under pressure, while gold gained a new boost in price. Here, it seems the local weakening of the dollar, the trade war between the U.S. and China, and the apparent U.S. involvement in the Middle Eastern crisis all play pivotal roles.

Adding to the uncertainty, Trump suggested that Washington might take control over Gaza and oversee its reconstruction. This effectively signals U.S. entry into the conflict. It's unlikely that the Palestinians, being displaced from their historic lands, will remain calm, marking this as America's war in the Middle East.

Financial markets simply cannot ignore these developments. Central banks have resumed purchasing physical gold, pushing its price towards new all-time highs. It seems likely that gold prices will soon reach $3,000 per ounce.

Conversely, the U.S. dollar, previously supported by Trump's tariff war, is now under pressure due to uncertainty about how his economic plans will unfold. A negative signal for the dollar came from yesterday's data on job openings, which fell significantly to 7.6 million in December, down from the revised November figure of 8.156 million. Investors likely interpret this as a possible sign of cooling in the U.S. labor market.

If this trend continues, the dollar may decline further, while demand for equities could rise due to increased hopes that the Federal Reserve will resume interest rate cuts in the summer of this year.

Key Reports to Watch This Week:

This makes the upcoming reports from ADP on private sector employment (due today) and the U.S. Department of Labor (usually released on Friday) particularly important.

According to the consensus forecast, the private sector is expected to have added 148,000 new jobs in January, up from 122,000 in December. This would be a positive signal. If job creation meets or exceeds this forecast, it will support the dollar and, surprisingly, might even be positively received by the stock market, signaling a recovery in the U.S. private sector after previous setbacks.

What to Expect in Markets Today?

I believe that the current trend of consolidation in U.S. stock indices will persist. Gold's rally may pause if labor market data from ADP and the U.S. Department of Labor exceed expectations. The U.S. dollar index (ICE) will likely remain within the 107.00–110.00 range.

Forecast of the Day:

#SPXThe CFD contract on the S&P 500 futures is trading in the 5912.40–6124.80 range.There's a possibility of a local decline towards 6124.80 if ADP data comes in above expectations.

EUR/USDThe pair is trading within a broad range of 1.0210–1.0525.If ADP figures surpass the forecast, we can expect a local drop in the pair towards the lower boundary of this range.