Global markets are bracing for a turbulent year ahead as inflation and trade tariffs take center stage, according to a new JPMorgan Chase & Co. electronic trading survey. The annual poll of over 4,200 institutional traders highlights volatility as the biggest daily trading challenge in 2025, jumping to 41% from 28% last year.
Tariffs Trigger Market Swings
Market volatility intensified this week after a series of U.S. tariff announcements. President Donald Trump ordered a 25% tariff on Canadian and Mexican imports, but later put them on hold after securing agreements on border security and drug trafficking. However, an across-the-board 10% tariff on Chinese imports has taken effect.
Traders remain uncertain about the long-term impact of these measures. Eddie Wen, JPMorgan’s global head of digital markets, noted, “Markets are reacting to news headlines in surprising ways, and I expect this trend to continue.”
Currency Markets React to Trade Uncertainty
The uncertainty surrounding tariffs has driven significant currency market fluctuations:
- The Mexican peso fell 3% on Monday before rebounding 1.5% higher.
- The Canadian dollar dropped 1.7% before closing up 0.8%.
“These are really large moves for major currencies that sparked a lot of execution, from hedge funds to the retail market,” said Chi Nzelu, JPMorgan’s global head of FICC e-trading.
Inflation Risks and the Fed’s Dilemma
The risk of higher import prices reigniting inflation has dampened expectations for aggressive Federal Reserve rate cuts in 2025. Traders are closely watching how inflation data evolves in response to rising trade costs.
Surging Demand for Electronic Trading
Every survey respondent expects to increase electronic trading activity, extending a years-long trend across asset classes.
“Tariff announcements can occur over weekends, and clients need immediate liquidity when markets open,” Nzelu explained, referencing the typically illiquid Sunday evening sessions in London.
Traders are split on preferred trading platforms:
- Single-dealer platforms: 28%
- Multi-dealer venues: 38%
- Both options: 34%
Crypto Trading Still on the Sidelines
Despite Bitcoin hitting record highs after Trump’s re-election, 71% of traders surveyed have no plans to trade cryptocurrencies.
However, interest in digital assets is growing. White House crypto czar David Sacks confirmed the administration is studying the feasibility of creating a “Bitcoin reserve”, and recent regulatory shifts are making it easier for banks to enter the space.
“The details are light at the moment, but we are keeping a close eye on how this develops,” Wen said.
Conclusion
As the U.S. and global markets adjust to a new trade environment, inflation, tariffs, and geopolitical risks are set to dominate trading strategies in 2025. The rise in electronic trading and heightened currency market activity indicate that traders are preparing for a volatile year ahead.