Tariff Uncertainty Roils Markets as Oil Rallies on Demand Outlook

Risk sentiment has deteriorated sharply as the incoming administration signals aggressive trade policies, with threats of additional tariffs on major trading partners creating widespread uncertainty across asset classes. This shift in sentiment has pressured cryptocurrencies, with Bitcoin retreating from recent highs as investors reassess exposure to riskier assets in an environment of potential economic friction.

Oil markets are moving in the opposite direction, supported by structural demand tailwinds that appear to outweigh near-term trade concerns. Long-term forecasts point to substantial growth in energy consumption driven by artificial intelligence infrastructure buildout and electrification trends in developing economies, while Mexico's ability to reduce fiscal support for its national oil company signals that elevated price levels are proving sustainable for producers.

The broader macro backdrop remains murky, with conflicting signals from central banks and persistent inflation concerns keeping traditional safe havens anchored. Currency markets are reflecting this uncertainty, with the dollar firming on inflation data while other major currencies struggle to find clear direction ahead of key policy meetings from the Federal Reserve and other central banks.