Tag: DollarIndex

  •  Traders focus to US-China talks, UK jobs report

     Traders focus to US-China talks, UK jobs report


    The US Dollar dropped as US-Sino trade talks began in London on Monday, amid an improvement in risk appetite and the first reports that talks are going well, according to US President Donald Trump. US equities are trading mixed, US Treasury bond yields down, as traders brace for the release of UK jobs data, ECB Survey of Monetary Analysis, and ECB speakers.

    Here’s what to watch on Tuesday, June 10:

    The US Dollar Index (DXY) retreated after posting solid gains last Friday, but it has fallen below the 99.00 level, poised to end the day down 0.28%. Last week’s Nonfarm Payrolls figures were solid despite the ongoing slowdown. Still, the data, along with the latest Atlanta Fed GDP Now, suggests a rebound in Q2 2025 is expected, following the contraction in the first quarter. Data-wise, Tuesday’s schedule will feature the US NFIB Optimism Index amid the Fed speaker’s absence due to the blackout period ahead of the June 17-18 meeting.

    EUR/USD rose past 1.1420 on the ECB’s speakers turning hawkish, particularly Peter Kazimir, who commented that the central bank is near, if not already at, the end of its easing cycle. This, and ECB’s Schnabel adding that the central bank might not decouple from the Fed, provided a tailwind for the shared currency. The docket will feature the ECB Survey of Monetary Analysis, ECB Speakers, and the Sentix Index.

    GBP/USD continues to climb, regaining 1.3500 as overall US Dollar weakness persists amid a sparse economic calendar. Market players are focused on the release of April’s Employment Change, the ILO Unemployment Rate, on Tuesday. On Wednesday, traders will eye the release of Britain’s government spending plans.

    The USD/JPY prints modest losses after the Japanese Yen appreciated as Gross Domestic Product (GDP) figures showed an improvement, despite remaining in contractionary territory, at -0.2% YoY, from the -0.7% plunge from the previous print. However, Japanese PM Ishimba saying that the economy is facing a phase of higher prices suggests that the Bank of Japan tightening cycle could continue to underpin the Yen.

    Both antipodean currencies, the AUD/USD and the NZD/USD, advanced to fresh two-day highs. The Aussie Dollar rose by 0.41% to 0.6515, with market players eyeing the release of Consumer Sentiment data and Business Confidence. The kiwi gained 0.61% at 0.6046 due to US Dollar weakness, across the board along with an improvement on Manufacturing Sales.

    Gold prices rose as bulls bought the dip below $3,300, while US Treasury bond yields and the US dollar fell. Nevertheless, a positive outcome of the US-China talks could send XAU/USD into a tailspin as flows move toward riskier assets.

    US Dollar PRICE This week

    The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Canadian Dollar.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD -0.21% -0.18% -0.17% 0.02% -0.31% -0.52% -0.02%
    EUR 0.21% 0.02% 0.03% 0.22% -0.08% -0.32% 0.18%
    GBP 0.18% -0.02% 0.08% 0.20% -0.09% -0.34% 0.16%
    JPY 0.17% -0.03% -0.08% 0.20% -0.19% -0.39% 0.03%
    CAD -0.02% -0.22% -0.20% -0.20% -0.35% -0.54% -0.04%
    AUD 0.31% 0.08% 0.09% 0.19% 0.35% -0.24% 0.26%
    NZD 0.52% 0.32% 0.34% 0.39% 0.54% 0.24% 0.50%
    CHF 0.02% -0.18% -0.16% -0.03% 0.04% -0.26% -0.50%

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).



    Source link

  • The US economy remains resilient

    The US economy remains resilient


    The President of the Federal Reserve (Fed) Bank of Dallas, Lorie Logan, struck a cautiously balanced tone in earlier remarks, acknowledging both persistent inflation pressures and rising market uncertainty.

    Key Quotes

    • Despite uncertainty and financial market volatility, the US economy is resilient.
    • The labour market remains stable.
    • Inflation is still somewhat above target.
    • Risks are balanced on both sides of the mandate.
    • If tariffs change inflation expectations, that would be significant.
    • Market volatility and uncertainty could cause households and businesses to pull back.
    • Monetary policy is well positioned to wait and be patient.
    • Well-positioned to act if risks materialise.
    • Key risk is if higher short-term inflation expectations become entrenched.
    • Our job is to ensure inflation doesn’t become persistent.



    Source link

  • Trump tariffs challenged – OCBC

    Trump tariffs challenged – OCBC


    US Dollar’s (USD’s) rebound found momentum from a US court ruling, saying that Trump’s unilateral imposition of ‘Liberation Day tariffs’ under the International Emergency Economic Powers Act (IEEPA) is invalid. DXY was last at 99.93 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

    2-way trades still likely in the near term

    “The ruling also blocks the enforcement of fentanyl-related tariffs on China, Mexico, and Canada that were announced earlier this year. In response, the Trump administration had filed a notice that it was appealing the ruling, and ultimately the US Supreme Court may have the final say. The court ruling helps to restore some credibility to the system which has been undermined by the unpredictability of Trump’s tariffs. “

    “The check and balance system is at least intact for now, providing a knee-jerk rebound for the USD while US futures jumped over 1%. Adding to FX market volatility was BoK Governor Rhee’s comments that Asian nations had currency talks with the US. This headline saw some knee-jerk reaction, slowing USD’s advance against Asian FX. Nevertheless, Rhee’s comments alongside, uncertainty over the legitimacy of Trump’s tariffs may continue to see more 2-way price action in the USD ahead of core PCE data (Friday).”

    “Daily momentum is not showing a clear bias while RSI rose. 2-way trades still likely in the near term. Resistance at 100.80/101 levels (50 DMA, 23.6% fibo retracement of 2025 peak to trough). Support at 99.2 and 97.90 (2025 low).”



    Source link

  • US Dollar Index slides after Trump lashes out to EU and Apple with tariffs

    US Dollar Index slides after Trump lashes out to EU and Apple with tariffs


    • The US Dollar Index sees the previous day’s relief rally pared back in full on Friday.  
    • Trump hints to tariffs for EU and starts to target domestic companies as well, with Apple’s Iphone facing 25% tariff.
    • The US Dollar Index extends losses and is on its way to test a fresh two-week low near 99.14.

    The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, dips further on Friday and erases the previous day’s recovery, trading near 99.20 at the time of writing. The fresh leg lower comes after the House of Representatives passed United States (US) President Donald Trump’s spending bill, now on its way to the Senate. The nonpartisan Congressional Budget Office revealed that this “big, beautiful bill” comes with a hefty price tag: $3.8 trillion in additional debt to the federal government’s $36.2 trillion over the next decade, according to Reuters.

    Markets, and indeed the bond market, have been very concerned about these numbers. The best example was the longer-term 30-year Bond, where yields rallied to 5.15% on Thursday from 4.64% at the start of May, a more than one-year high since the 5.18% seen at the end of December 2023. More concerns could devalue the US Dollar even further. 

    Meanwhile President Trump came out on his social media platform Truth Social by saying that he is considering putting a 50% tariff on EU goods as of June 1st. Apple might face a 25% tariff on its Iphone if the model is not made in the US. Both Apple and EU equities are diving lower on the back of this news.

    Daily digest market movers: The approach raises more questions

    • United States Secretary of the Treasury Scott Bessent gave further details on President Trump’s comments. Bessent said that the EU was not making enough progress on its talks with the US. The proposals itself from Europea re not that good as from other countries, Bessent said, Bloomberg reports.
    • President Trump threatens with a 50% tariff on all EU goods from June 1st and a 25% tariff on Iphones if they are not made in the US, Bloomberg reports.
    • At 12:35 GMT, St. Louis Fed President Alberto Musalem participates in a fireside chat with Kansas City Fed President Jeff Schmid at the Heartland Health Institute, Benthoville.
    • At 14:00 GMT, April’s New Home Sales data will be released. 
    • At 16:00 GMT, Federal Reserve Bank Governor Lisa Cook speaks on financial stability at the Seventh Annual Women in Macro Conference.
    • Equities are diving lower, with losses over 2% across Europe and over 1% in the three main US indices.
    • The CME FedWatch tool shows the chance of an interest rate cut by the Federal Reserve in June’s meeting at just 5.3%. Further ahead, the July 30 decision sees odds for rates being lower than current levels at 28.2%. Recent hawkish comments from Fed officials have reduced the chances of a rate cut in the short term.
    • The US 10-year yields trade around 4.47%, cooling down from their peak performance earlier this week at 4.62%.  

    US Dollar Index Technical Analysis: Another bad week

    The US Dollar Index is back to square one, flirting with a fresh two-week low at the time of writing near 99.40. With the spending bill now having cleared that first hurdle, the risk of a substantial shock effect in the US debt could further materialise. Even another cut in its credit rating might be under consideration, denting the US image and the US Dollar even further. 

    On the upside, the broken ascending trend line and the 100.22 level, which held the DXY back in September-October, are the first resistance zone. Further up, the 55-day Simple Moving Average (SMA) at 101.49 is the next level to watch out for, followed by 101.90, a pivotal level throughout December 2023 and as a base for the inverted head-and-shoulders (H&S) formation during the summer of 2024. In case Dollar bulls push the DXY even higher, the 103.18 pivotal level comes into play.

    If the downward pressure continues, a nosedive move could materialize towards the year-to-date low of 97.91 and the pivotal level of 97.73. Further below, a relatively thin technical support comes in at 96.94 before looking at the lower levels of this new price range. These would be at 95.25 and 94.56, meaning fresh lows not seen since 2022.

    US Dollar Index: Daily Chart

    US Dollar FAQs

    The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
    Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

    The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
    When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

    In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
    It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

    Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.



    Source link

  • Forex Today: It’s PMI-day!!!

    Forex Today: It’s PMI-day!!!



    The US Dollar (USD) maintained its weekly leg lower well in place, weakening to new two-week lows on the back of rising concerns over the US fiscal position in light of President Trump’s tax bill and worries over the performance of the US economy.



    Source link

  • Mexican Peso firms as US Dollar softens and Treasury yields climb

    Mexican Peso firms as US Dollar softens and Treasury yields climb


    • The Mexican Peso gains ground against the US Dollar as Moody’s downgrade of US sovereign debt weighs on the Greenback.
    • The Federal Reserve is set to review the discount rate on Monday, potentially influencing short-term funding conditions.
    • USD/MXN trades cautiously below the key psychological resistance at 19.50, reflecting broader Dollar weakness.

    The Mexican Peso (MXN) remains firm against the US Dollar (USD) as markets react to renewed uncertainty following Moody’s downgrade of the US credit rating. The decision to lower the sovereign rating to AA1 from AAA has prompted a reassessment of the US Dollar’s status. While the MXN slightly benefits from the USD’s weakness, the broader risk-off tone in the market causes the Mexican currency to fall against other peers such as the Euro (EUR), the Pound Sterling (GBP), or the Australian Dollar (AUD).

    While the Greenback has retained its global reserve status and safe-haven appeal, mounting concerns over trade tensions, tariff instability, and a deteriorating fiscal outlook are weighing on sentiment. Structural headwinds, including ballooning US debt and subdued growth prospects, have tempered interest rate expectations and contributed to the Greenback’s broad weakness.

    At the time of writing, USD/MXN is trading near 19.43, down 0.12% on the day. The former psychological support at 19.50 has now turned into a resistance barrier, with market participants watching to see whether the Peso can sustain its upward momentum.

    Mexican Peso daily digest: USD/MXN slides as cautious Fed tone and Moody’s downgrade weigh on the Dollar

    • Federal Reserve officials offered a cautious outlook, with Vice Chair for Supervision Philip N. Jefferson, New York Fed President John C. Williams, and Atlanta Fed President Raphael W. Bostic signaling policy vigilance amid fiscal concerns.
    • Dallas Fed President Lorie K. Logan and Minneapolis Fed President Neel Kashkari focused on market structure and broader economic risks, factors that continue to influence USD performance against emerging market peers like the Mexican Peso.
    • Moody’s became the latest major credit agency to downgrade the US sovereign rating, triggering a rise in Treasury yields and a slump in the DXY US Dollar Index.
    • As perceived credit risk rises, the US must offer higher interest rates to attract investors who might otherwise shift capital to alternative safe-haven assets. While rising yields tend to be supportive for the USD, the broader context of fiscal instability has the potential to weigh on the Greenback.
    • Comments from Fed speakers throughout the day may provide insights into the trajectory of US monetary policy, influencing the performance of the US Dollar against global counterparts, including USD/MXN. 
    • Persistent trade tensions between Mexico and the United States continue to create downside risks for the Peso. With roughly 80% of Mexican exports directed toward the US, any disruption or tariff-related uncertainty could magnify market volatility in the pair.

    Mexican Peso Technical Analysis: Peso holds gains as USD/MXN consolidates between key levels

    USD/MXN remains under pressure, extending its bearish trajectory beneath the descending trendline and the 20-day Simple Moving Average (SMA), currently at 19.55. The pair has failed to clear resistance near the 78.6% Fibonacci retracement level of the October–February rally at 19.578, reinforcing a weak technical outlook. 

    Price action continues to oscillate within a narrow range, with repeated failures to break higher indicating ongoing downside pressure.

    USD/MXN daily chart

    The consolidation zone between 19.30 (May low) and 19.72 (23.6% Fib) has acted as a containment range for several weeks. A breakdown below 19.30 could open the door toward the October 2024 low at 19.11, while a daily close above 19.72 would be needed to suggest a shift in sentiment and challenge the next key level at 19.98 (38.2% Fib).

    The Relative Strength Index (RSI) at 40.06 remains subdued, supporting the bearish bias while signaling a lack of upward momentum.

    US Dollar FAQs

    The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
    Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

    The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
    When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

    In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
    It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

    Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.



    Source link

  • Trump tariffs challenged – OCBC

    US Dollar goes nowhere with talks not even starting and Zelenskyy set to leave Istanbul


    • The US Dollar trades steady lower on Thursday despite a slew of key US economic data released. 
    • Markets see talks in Turkey between Russia and Ukraine fall apart before even starting.
    • The US Dollar Index holds just below 101.00 and could move either way after a volatile Wednesday. 

    The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is catching its breath and trades slightly lower just below the 101.00 level at the time of writing on Thursday, ahead of a chunky United States (US) economic calendar. The Greenback is not really moving on the back of the geopolitical defusing by US President Donald Trump, who commented during his Middle Eastern trip that nuclear talks with Iran have good hopes, while both Yemen and Syria deserve a second chance. 

    After Wednesday’s sharp volatility affecting the Korean Won (KRW), traders are looking to Asia for possible more currency hiccups and evidence that the Trump administration is seeking a currency deal with countries in the region to devalue the Greenback. 

    Meanwhile in Turkey it appears talks between Russia and Ukraine are not going well. Even before the two negotiating teams have joined, talks seem to already have been broken down. US President Trump meanwhile said on Air Force One that peace will not come if Trump and Russian President Vladimir Putin do not meet, Bloomberg reports.

    Daily digest market movers: Going Nowhere

    • The US economic calendar kicked off at 12:30 GMT with a string of data:
      • Weekly Initial Jobless Claims came in at 229,000, as expected and from 228,00 in the previous week. The Continuing Claims came in softer at 1.881 million, beating the 1.89 million estimate and from 1.879 million previously. 
      • The NY Empire State Manufacturing Index for May only fell to -9.2, beating the expected -10, from -8.1 the previous month. The Philadelphia Fed Manufacturing Survey for May was a surprise -4, far better than the expected -11 and from -26.4 in April. 
      • The monthly April headline Producer Price Index contracted by -0.5%, where an increase by 0.2% was expected and from the 0.4% decline in March. The core PPI contracted by -0.4%, missing the 0.3% estimate and compared to -0.1% previously.
      • April Retail Sales fell to just 0.1%, a small beat on the 0% estimate and compared to the 1.5% previous release. Retail Sales excluding Cars and Transportation only increased by 0.1%, missing the 0.3% estimate and compared to the 0.5% rise in March. That same 0.5% for March got revised up to 0.8%.
    • Federal Reserve Chairman Jerome Powell delivered a speech about the Fed’s framework review at the Thomas Laubach Research Conference in Washington DC. Though the Fed Chairman did not comment on any near-term economic outlook or rate path.
    • The monthly Industrial Production data for April fell to 0.0%, a miss on the estimated 0.2%, though up from the -0.3% in March. 
    • At 18:05 GMT, Federal Reserve Bank Vice Chair for Supervision Michael Barr will deliver opening remarks (via pre-recorded video) at the 2025 Northeast/Mid-Atlantic Small Business Credit Symposium.
    • Equities are slumping across the board on Thursday, though nowhere more than 1% losses to report from Asia, across Europe, and into the US equity futures markets. 
    • The CME FedWatch tool shows the chance of an interest rate cut by the Federal Reserve in June’s meeting at just 8.2%. Further ahead, the July 30 decision sees odds for rates being lower than current levels at 38.6%.
    • The US 10-year yields trade around 4.53%, and keep ticking higher, nearing a one-month high.

    US Dollar Index Technical Analysis: Stuck between two forces

    The US Dollar Index saw the pivotal technical level at 100.22 hold firmly, delivering a small bounce for the Greenback on Wednesday. With the slide below 101.00, the DXY looks well-positioned to go either way, driven by the US economic data releases later this Thursday. A return to 101.90 could materialize, while the downside support at 100.22 is not far off. 

    On the upside, 101.90 is the first big resistance again. It already acted as a pivotal level throughout December 2023 and as a base for the inverted head-and-shoulders (H&S) formation during the summer of 2024. In case Dollar bulls push the DXY even higher, the 55-day Simple Moving Average (SMA) at 102.06 comes into play. 

    On the other hand, the previous resistance at 100.22 is now acting as firm support, followed by the year-to-date low of 97.91 and the pivotal level of 97.73. Further below, a relatively thin technical support comes in at 96.94 before looking at the lower levels of this new price range. These would be at 95.25 and 94.56, meaning fresh lows not seen since 2022.

    US Dollar Index: Daily Chart

    Banking crisis FAQs

    The Banking Crisis of March 2023 occurred when three US-based banks with heavy exposure to the tech-sector and crypto suffered a spike in withdrawals that revealed severe weaknesses in their balance sheets, resulting in their insolvency.
    The most high profile of the banks was California-based Silicon Valley Bank (SVB) which experienced a surge in withdrawal requests due to a combination of customers fearing fallout from the FTX debacle, and substantially higher returns being offered elsewhere.

    In order to fulfill the redemptions, Silicon Valley Bank had to sell its holdings of predominantly US Treasury bonds. Due to the rise in interest rates caused by the Federal Reserve’s rapid tightening measures, however, Treasury bonds had substantially fallen in value. The news that SVB had taken a $1.8B loss from the sale of its bonds triggered a panic and precipitated a full scale run on the bank that ended with the Federal Deposit Insurance Corporation (FDIC) having to take it over.The crisis spread to San-Francisco-based First Republic which ended up being rescued by a coordinated effort from a group of large US banks. On March 19, Credit Suisse in Switzerland fell foul after several years of poor performance and had to be taken over by UBS.

    The Banking Crisis was negative for the US Dollar (USD) because it changed expectations about the future course of interest rates. Prior to the crisis investors had expected the Federal Reserve (Fed) to continue raising interest rates to combat persistently high inflation, however, once it became clear how much stress this was placing on the banking sector by devaluing bank holdings of US Treasury bonds, the expectation was the Fed would pause or even reverse its policy trajectory. Since higher interest rates are positive for the US Dollar, it fell as it discounted the possibility of a policy pivot.

    The Banking Crisis was a bullish event for Gold. Firstly it benefited from demand due to its status as a safe-haven asset. Secondly, it led to investors expecting the Federal Reserve (Fed) to pause its aggressive rate-hiking policy, out of fear of the impact on the financial stability of the banking system – lower interest rate expectations reduced the opportunity cost of holding Gold. Thirdly, Gold, which is priced in US Dollars (XAU/USD), rose in value because the US Dollar weakened.



    Source link

  • US Dollar down after soft CPI readings

    US Dollar down after soft CPI readings


    • US CPI inflation cooled to 2.3% in April, below expectations, raising Fed rate cut speculation.
    • Trump touts tax cuts and investment deals, but details on trade pacts remain vague.
    • DXY slips below 101.60 as tariff truce with China lacks forward clarity.
    • Markets expect first Fed rate cut by September 2025 with easing through 2026.

    The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of currencies, lost ground on Tuesday, slipping to 101.50 as inflation data for April came in softer than expected. While CPI rose 0.2% monthly and 2.3% annually, missing forecasts, core inflation held steady at 2.8%. 

    Traders remain cautious amid vague trade commitments with China and the UK, and there are new uncertainties after President Trump pushed ambitious investment and tax plans without detailing how they would impact the economy. Despite tariff de-escalation headlines, the Fitch-rated effective tariff rate on Chinese goods remains above 40%, fueling doubt over the recent deal’s durability.

    Daily digest market movers: CPI figures and trade policies in spotlight

    • CPI inflation in the US slowed to 2.3% annually in April, missing the expected 2.4%, and core CPI held at 2.8% YoY.
    • Trump claims China has lowered tariffs, but Fitch says effective rates remain above 40% after legacy policies.
    • Markets question substance of recent China and UK trade deals as details remain scant.
    • President Trump promotes a $4 trillion tax cut bill focused on high-income earners, while lower-income taxes may rise.
    • Trump says new “investment agreements” with firms like Amazon and Oracle will fuel growth but provides no framework.
    • Fed’s Goolsbee warns tariffs can still fuel inflation, but recent data don’t confirm those fears.
    • US and China have agreed to a 90-day tariff truce with US duties reduced to 30% and China’s to 10%.
    • Fed policymakers maintain cautious tone as CPI remains within acceptable ranges, delaying potential monetary easing.
    • Rate markets show a 91.6% probability of no change at the June 18 Fed meeting and 65.1% in July.
    • September has a 51.6% probability of a 25 bps cut, with long-term projections pointing to 3.25%-3.50% by end of 2026.
    • Risk assets remain mixed; Gold is flat after recent pullbacks, while Oil and equities are cautiously bid.
    • Trump hints at Iran talks and outlines intent to enforce oil export embargo if diplomacy fails.
    • Fed Chair Powell’s comments are awaited later in the week for guidance on policy direction.
    • EUR/USD remains under pressure near 1.1060 with resistance at 1.1322 and support at the 1.1000 mark.

    US Dollar Index technical analysis: Rate gap issues persist

    The US Dollar Index exhibits a bearish signal, currently trading near 101.00 after a minor daily decline. Price action sits near the lower end of the intraday range between 101.19 and 101.76.The Relative Strength Index (RSI) and the Ultimate Oscillator both hover in the 50s, suggesting neutral momentum. 

    The Moving Average Convergence Divergence (MACD) shows a modest buy signal, but this is countered by the Stochastic Relative Strength Index (Stochastic RSI) Fast, which is extended in the 90s — indicating overbought conditions. Additionally, the 10-period Momentum indicator near 2.00 reinforces short-term selling pressure.

    On the moving average front, the 20-day Simple Moving Average (SMA) continues to point upward, hinting at near-term bullishness. However, the 50-day Exponential Moving Average (EMA), 50-day SMA, 100-day SMA, and 200-day SMA — all clustered near the 100 level — indicate a broader bearish trend. Key support levels are identified at 100.94, 100.73 and 100.63, while resistance levels are noted at 101.42, 101.94 and 101.98.

    US-China Trade War FAQs

    Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.

    An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.

    The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.



    Source link

  • US Dollar down after soft CPI readings

    US Dollar Index set for 0.5% loss on steady CPI and rate cut bets rising


    • The Greenback on the backfoot this Tuesday while the US-China trade deal euphoria quickly fades. 
    • Traders see April’s US CPI release not really showing inflationary signals after Liberation Day.
    • The US Dollar Index slips back to 101.50 after failing to reclaim the 102.00 level.

    The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, corrects to near 101.50 ahead of the US trading session on Tuesday. The partial paring back of Monday’s gains comes as traders become wary of the lack of detail on the recent trade deal between China and the United States (US). Besides slashing the tariffs, no forward dates or topics are set, raising questions on what has been discussed, similar to the UK-US trade deal from Thursday. 

    Meanwhile, on the economic data front, the US Consumer Price Index (CPI) release for April came in broadly in line of expectations. For now, that feared inflationary shock has not materialized and sees traders carefully consider the possibility of rate cuts from the Federal Reserve. Overnight, Federal Reserve (Fed) Bank President of Chicago Austan Goolsbee warned that even current tariff levels will still have an inflationary impulse, the New York Times reported. That theory does not seem to be translated into the April CPI numbers for now.

    Daily digest market movers: Not for now

    • On Monday, President Trump lashed out at the European Union (EU), saying that the US has the upper hand in its trade discussions with the EU. “The European Union is in many ways nastier than China. We’ve just started with them. We have all the cards. They treated us very unfairly,” Trump said at the White House.
    • At 10:00 GMT, the National Federation of Independent Business (NFIB) released its Business Optimism Index for April. The actual number came in at 95.8 compared to the previous 97.4. The expectation was for a 94.5. 
    • The April US Consumer Price Index data came in not really shocking:
      • Monthly headline CPI came in at 0.2%, lower than the 0.3% expected and away from the disinflationary -0.1% in March. The yearly figure came in at 2.3% from the previous 2.4%.
      • The Monthly core CPI came in at as well at 0.2%, just missing the 0.3% estimate and a touch higher from 0.1% in March. The yearly figure is set to remain unchanged at 2.8%.
    • Equities in the US are rallying near 1% with a second sigh of relief, this time on US inflation which has not run out of control in April.
    • The CME FedWatch tool shows the chance of an interest rate cut by the Federal Reserve in June’s meeting at just 8.2%. Further ahead, the July 30 decision sees odds for rates being lower than current levels at 38.6%.
    • The US 10-year yields trade around 4.47%, with traders mulling possible rate cut bets for the Fed after these steady CPI numbers.

    US Dollar Index Technical Analysis: Rate gap issues

    Warning lights flashing this Tuesday for the US Dollar Index from a pure technical point of view. The fact that the DXY was unable to break 102.00 and closed below the important 101.90 technical level is opening up the door for a harsh retracement back to 100.00. The US CPI release later this Tuesday could be vital to either broaden the rejection with a weaker Greenback or push it firmly above 102.00.

    On the upside, the DXY is flirting with a technical rejection against 101.90, which acted as a pivotal level throughout December 2023 and as a base for the inverted head-and-shoulders (H&S) formation during the summer of 2024. In case Dollar bulls push the DXY even higher, the 55-day Simple Moving Average (SMA) at 102.29 comes into play. 

    On the other hand, the previous resistance at 100.22 is acting as firm support, followed by 97.73 near the low of 2025. Further below, a relatively thin technical support comes in at 96.94 before looking at the lower levels of this new price range. These would be at 95.25 and 94.56, meaning fresh lows not seen since 2022.

    US Dollar Index: Daily Chart

    (This story was corrected on May 13 at 13:04 GMT to say that Headline yearly inflation is 2.3% instead of 2.4%.)



    Source link

  • US Dollar Index slides after Trump lashes out to EU and Apple with tariffs

    Trades near 100.50, remains below channel’s upper boundary


    • The US Dollar Index may retest the upper boundary of its ascending channel near 100.80.
    • A decisive break above the 50 mark would be required to confirm a shift toward bullish momentum.
    • The DXY may target immediate support at the nine-day EMA of 100.10.

    The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against a basket of six major currencies, is losing ground for the second successive session, trading near 100.60 during the Asian hours on Monday.

    On the daily chart, technical analysis suggested a sustained bullish bias, with the index trading within an ascending channel. Additionally, the DXY continues to hold above the nine-day Exponential Moving Average (EMA), indicating strengthening short-term momentum.

    However, the 14-day Relative Strength Index (RSI) remains below the 50 level, indicating a bearish bias is in play. A clear move above the 50 threshold would be needed to confirm a shift toward bullish momentum.

    To the upside, the US Dollar Index may retest the upper boundary of the ascending channel around 100.80. A break above the channel would reinforce bullish bias and support the index to approach the 50-day EMA at the 101.81 level. A break above this level could improve the medium-term price momentum and support the index to explore the area around the two-month high at 104.37, reached on April 1.

    On the downside, immediate support is seen at the nine-day EMA of 100.10. A break below this level could weaken the short-term price momentum and lead the DXY to test the lower boundary of the ascending channel around 99.50. Further decline would put pressure on the index to navigate the region around 97.91 — the lowest level since March 2022, which was recorded on April 21.

    US Dollar Index: Daily Chart

    US Dollar PRICE Today

    The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD 0.14% 0.13% -0.34% 0.17% -0.28% -0.14% -0.10%
    EUR -0.14% 0.12% 0.05% 0.52% 0.21% 0.21% 0.24%
    GBP -0.13% -0.12% 0.12% 0.40% 0.10% 0.01% 0.12%
    JPY 0.34% -0.05% -0.12% 0.50% -0.56% -0.65% 0.00%
    CAD -0.17% -0.52% -0.40% -0.50% -0.18% -0.30% -0.28%
    AUD 0.28% -0.21% -0.10% 0.56% 0.18% -0.10% -0.00%
    NZD 0.14% -0.21% -0.01% 0.65% 0.30% 0.10% 0.00%
    CHF 0.10% -0.24% -0.12% -0.01% 0.28% 0.00% -0.00%

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).



    Source link

  • US Dollar down after soft CPI readings

    Much ado about little – Commerzbank


    Yesterday afternoon, Donald Trump finally presented his first trade deal with the United Kingdom in the Oval Office. However, despite all the fanfare, it must be said that the substance was rather thin once again. There was much talk of the great opportunities that this deal offers both countries, Commerzbank’s FX analyst Volkmar Baur notes.

    US-UK trade deal is a warning sign

    “The US will probably gain preferential access to UK markets for ethanol and agricultural products, with beef being mentioned repeatedly. The size of these markets is estimated at USD 700 million for ethanol and USD 250 million for agricultural products. Taken together, this amounts to less than a billion US dollars — less than 0.5% of last year’s US exports. In addition, a major UK airline has agreed to purchase USD 10 billion worth of aircraft from the US. At first glance, this sounds like a much bigger deal. However, the United Kingdom already purchased aerospace products worth USD 10 billion last year. Furthermore, no timeframe has been given for when this purchase volume is to be executed.”

    “Meanwhile, the 10% reciprocal tariffs on UK exports to the US remain largely in place. With a few exceptions. The tariff on steel and aluminium will be set at zero. However, these two items together only accounted for 2% of UK exports to the US last year. Additionally, the UK will be permitted to continue importing aircraft turbines and parts into the US duty-free. This is likely to ensure that US aircraft manufacturers continue to have access to these products. Lastly, the UK will be permitted to import 100,000 cars per year into the US at the reduced tariff rate of 10%. Otherwise, a tariff rate of 25% applies to cars and car parts imported into the US.”

    “The 10% tariff seems to represent a kind of lower limit for the US. Any other countries currently negotiating with the US cannot expect the tariffs to be abolished. Therefore, the effective tariff rate in the US, which was 2.4% last year, is likely to rise to at least 10%. Even in a best-case scenario. No major leaps forward should be expected in the upcoming deals. The US-UK deal contains only cosmetic changes. Negotiations with other countries, especially the EU and China, are likely to be much more challenging. Granting preferential access to the US for the UK’s agricultural markets would contradict the WTO’s ‘most favoured nation’ rule.”



    Source link

  • US yields slip as Powell signals patience, US Dollar pulls back from highs

    US yields slip as Powell signals patience, US Dollar pulls back from highs


    • Treasury yields ease after Powell says the Fed can be patient and policy remains appropriate.
    • DXY edges down to 99.51 after peaking at 99.63; the Greenback is under pressure from falling yields.
    • Powell warns tariffs may hinder progress on Fed’s goals, adding to uncertainty over policy path.

    US Treasury yields edged lower across the whole curve, falling by an average of two and a half to three basis points after plunging more than seven basis points earlier. However, when asked whether the Federal Reserve (Fed) is leaning toward one side of its dual mandate, Chair Jerome Powell stated that it is too early to predict.

    10-year yield falls to 4.27% after Chair Powell downplays urgency for action

    The US 10-year Treasury yield falls two and a half basis points to 4.271% at the time of writing, weighing on the Greenback, which has so far retreated from daily highs of 99.63, as depicted by the US Dollar Index (DXY).

    The DXY, which tracks the performance of the buck’s value against a basket of currencies, is at 99.51 up 0.12%.

    Chair Jerome Powell said that the Fed is in no hurry and can be patient. He noted that current monetary policy is appropriate and that if things develop, “we can move quickly as appropriate.” Powell added, “We won’t make progress on our goals this year if tariffs remain.”

    US 10-year yield daily chart

    Fed FAQs

    Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
    When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
    When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

    The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
    The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

    In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
    It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

    Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.



    Source link

  • Trump tariffs challenged – OCBC

    US Dollar steady ahead of first top data release for the first quarter


    • The US Dollar trades marginally higher against most major currencies. 
    • President Trump lashed out at Fed’s Powell again during a rally in Detroit. 
    • The US Dollar Index is capped below the 100.00 round level ahead of key US data. 

    The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, edges slightly higher and trades at 99.40 at the time of writing on Wednesday. The Greenback is not really going anywhere as investors stay on the sidelines against key data releases during the American session. United States (US) President Donald Trump signed an executive order to ease the tariff impact on car parts and, during a rally in Detroit, lashed out at Federal Reserve Chairman Jerome Powell again, proclaiming Trump knows more about interest rates than Powell does. 

    On the economic calendar front, a general rehearsal will take place this Wednesday ahead of the Nonfarm Payrolls release on Friday. The US Gross Domestic Product (GDP) preliminary reading for Q1  will already be a vital element to assess the first impact, if any, of the administration’s tariff policy. The reading could stoke recession fears in case it shows weak growth or even contraction, while it could fire up stock markets if the initial impact of tariffs and Trump’s presidency on growth proves to be rather limited.  

    Daily digest market movers: Calm before the storm, part 1

    • At 12:30 GMT, the preliminary reading of the first quarter for US Gross Domestic Product is to be released. Economists expect the US economy to have grown by a modest annualized rate of 0.4%, much slower than the 2.4% expansion seen in 2024’s fourth quarter. 
    • In that same time span, the monthly PCE data for March will also be released. The Monthly Core PCE is expected to come in at 0.1%, down from 0.4%. The monthly headline number is expected to fall to 0%, from 0.3% previously. 
    • Around 13:35 GMT, the Chicago Purchasing Manager’s Index for April is due. Expectations are for a further contraction to 45.5 from 47.6.
    • Equities are rather mixed, with overall losses to be reported. In the US, all futures are already pointing to red openings. After the US closing bell, Microsoft (MSFT) and Alphabet (GOOG) will report earnings. 
    • The CME FedWatch tool shows the chance of an interest rate cut by the Federal Reserve in the May’s meeting stands at 7.6% against a 92.4% probability of no change. The June meeting sees a 65.1% chance of a rate cut. 
    • The US 10-year yields trade around 4.15%, ticking lower for a second day in a row, with traders slowly but surely buying back into US bonds as rate cut bets are starting to pick up. 

    US Dollar Index Technical Analysis: Steady for now

    The US Dollar Index (DXY) is starting to pick up from its low levels of 2025. Bulls are slowly starting to take back control of the chart. However, risk elements persist with the uncertainty and possible further deterioration of US data likely to cause the DXY to edge substantially lower. 

    On the upside, the DXY’s first resistance comes in at 100.22, which supported the DXY back in September 2024, with a break back above the 100.00 round level as a bullish signal. A firm recovery would be a return to 101.90, which acted as a pivotal level throughout December 2023 and again as a base for the inverted head-and-shoulders (H&S) formation during the summer of 2024.

    On the other hand, the 97.73 support could quickly be tested on any substantial bearish headline. Further below, a relatively thin technical support comes in at 96.94 before looking at the lower levels of this new price range. These would be at 95.25 and 94.56, meaning fresh lows not seen since 2022.

    US Dollar Index: Daily Chart

    US Dollar FAQs

    The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
    Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

    The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
    When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

    In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
    It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

    Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.



    Source link

  • Trump tariffs challenged – OCBC

    Technical rebound is under way – OCBC


    Relative calm continues to be observed this week amid Trump’s de-escalation. Trump continued to speak about how his administration was talking to China about trade even as Beijing denied the existence of negotiations. Chinese Commerce Ministry spokesman He Yadong said that ‘any reports on development in talks are groundless’ and urged the US to ‘show sincerity’ if it wants to make a deal. DXY was last seen at 99.60 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

    Bearish momentum on daily chart fades

    “Separately, we also shared that the Ministry of Foreign Affairs spokesman Guo Jiakun said that China’s stance on the tariff war initiated by the US is clear: we do not wish to fight, nor are we afraid to fight. If it comes to a fight, we will see it through; if it comes to talks, our door is open. He emphasised that if the US truly wants to resolve issues through dialogue and negotiation, it should stop threatening and coercing and engage in dialogue with China on the basis of equality, respect, and mutual benefit.”

    “This morning, Bloomberg headlines reported that China was said to exempt some US goods from tariffs as costs rise. The case of a de-escalation narrative persisting for a while more should not be ruled out and can aid USD short covering (especially against safe haven proxies), following the >10% decline (at one point) since Jan peak. The broad USD bounce may also see some AxJs come under pressure in the interim, despite conciliatory tone towards a trade truce/deal.”

    “Bearish momentum on daily chart faded while RSI rose. Resistance at 100.10, 100.80/101.20 levels (23.6% fibo retracement of 2025 peak to trough, 21 DMA). Support at 99.10, 98.60 levels. Elsewhere, we caution that month-end USD rebalancing flows may risk distorting FX price action.”



    Source link

  • US Dollar Index slides after Trump lashes out to EU and Apple with tariffs

    US Dollar stuck with a loss as US data starts to sour


    • The US Dollar halts decline and sees the DXY US Dollar Index trade around 0.50% lower. 
    • China says tariffs need to go first, before talks can start.  
    • The US Dollar Index remains capped below the 100.00 round level. 

    The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, trades lower, roughly 0.60% on Thursday. The knee-jerk reaction originates from United States (US) President Donald Trump and US Treasury Secretary Scott Bessent. Both individually said that no unilateral offer was made to China from the US to lower tariffs, while Trump said that reciprocal tariffs could be revisited if negotiations are not going the way the Trump administration wants them to go, Bloomberg reports. 

    On the economic calendar front, Durable Goods is painting a very split picture. The headline Durable Goods number is a whopping 10.4% surge against the previous 0.8% where a 2.0% was expected for March. Though, the caveat comes with the core Durable Goods where cars and transportations are left out, which sinks to 0%, a standstill, against the previous 0.7% and expected 0.2%..

    Daily digest market movers: US data is getting muddy

    • The Financial Times reports that China has called on the US to “completely cancel all unilateral tariff measures” if it wants trade talks on Thursday just hours before the US opening bell. Previous remarks and statements from the Trump administration on a possible trade deal with China are being labeled as ‘fake news’ by Beijing.
    • The Chicago Fed National Activity Index for March fell into contraction by -0.03, coming from 0.18. that same number got revised up to 0.24 for February.
    • The US Durable Goods for March and the Jobless Claims already came out as well:
      • Headline Durable Goods came in at a whopping 10.4%, beating the expected 2% and far up from 1% previously which got revised down to 0.9%. The Orders without Cars and Transportation fell to 0.0%, missing the 0.2% and far less than the 0.7% advance seen a month earlier.
      • Weekly Initial Jobless Claims came in higher at 222,000, beating the estimate of 221,000 and up from 215,000 previously. Continuing Claims fell to 1.841 million, beating the 1.88 million estimate. 
    • Existing Home Sales data for March is starting to signal issues as sales dropped to 4.02 million units, a big miss from the 4.13 million expected and coming from 4.27 million in February.
    • Near 15:00 GMT, the Kansas Fed Manufacturing Activity Index for April is expected. No forecast available with the previous number at 1.
    • Equities are in a good mood as geopolitical headlines are less active this Thursday, seeing equities overall be positive up to 1% on the day across Europe and the US.
    • The CME FedWatch tool shows the chance of an interest rate cut by the Federal Reserve in May’s meeting stands at 6.1% against a 93.9% probability of no change. The June meeting still has around a 58.7% chance of a rate cut. 
    • The US 10-year yields trade around 4.32% looking for direction as markets are facing some knee jerk reactions on the Trump comments. 

    US Dollar Index Technical Analysis: Getting hard to read

    The US Dollar Index (DXY) is backing off again after a two-day recovery. It looks like the DXY will start to consolidate, trading in a tight range between 100.00 and 98.00. Traders are likely to be fed up with these constant knee-jerk reactions and could opt to look for other places to put their money, with Gold as the preferred sweet spot. 

    On the upside, the DXY’s first resistance comes in at 99.58,  acting up again as a false break occurred Wednesday and Thursday. Should the US Dollar be able to turn positive again, look for 100.22 with a break back above the 100.00 round level as a bullish signal of their return. A firm recovery would be a return to 101.90.

    On the other hand, the 97.73 support is very close and could snap at any moment. Further below, a rather thin technical support comes in at 96.94, before looking at the lower levels of this new price range. These would be at 95.25 and 94.56, meaning fresh lows not seen since 2022.

    US Dollar Index: Daily Chart

    Fed FAQs

    Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

    The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

    In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

    Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

    BRANDED CONTENT

    Finding the right broker for your trading strategy is essential, especially when specific features make all the difference. Explore our selection of top brokers, each offering unique advantages to match your needs.



    Source link

  • US data, Germany’s morale gauges, and tariffs take centre stage

    US data, Germany’s morale gauges, and tariffs take centre stage


    The Greenback extended their recovery on the back of auspicious headlines around the US-China trade crisis and mitigating fears around potential threats to the Fed’s independence by President Trump.

    Here is what you need to know on Thursday, April 24:

    The US Dollar Index (DXY) advanced further and retargeted the psychological 100.00 barrier, up for the second straight day. The weekly Initial Jobless Claims are due, seconded by the Chicago Fed National Activity Index, Durable Goods Orders, and Existing Home Sales.

    EUR/USD came under extra selling pressure, challenging the 1.1300 key support, or multi-day troughs. Germany’s IFO Business Climate will be only released on the domestic calendar.

    GBP/USD broke below the 1.3300 support to reach new four-day lows amid the persistent advance in the Greenback. Next on tap across the Channel will be the CBI Business Optimism Index, seconded by Industrial Trend Orders.

    USD/JPY gained extra steam and broke above the 143.00 hurdle, hitting fresh multi-day peaks. The weekly readings of Foreign Bond Investment are expected.

    Prices of WTI dipped to four-day lows, breaching the $62.00 mark per barrel following the likelihood that the OPEC+ could hike the crude oil output next month.

    The better tone in the risk-linked assets as well as the higher US Dollar and easing US-China trade concerns all weighed on the yellow metal, dragging Gold prices below the $3,300 mark per troy ounce. Silver prices, in the meantime, rallied to three-week highs around the $33.70 zone per ounce.



    Source link

  • US Treasury Secretary Bessent sees de-escalation with China – Bloomberg

    US Treasury Secretary Bessent sees de-escalation with China – Bloomberg


    The US Treasury Secretary Scott Bessent commented that the tariff standoff with China is unsustainable and that he expects a de-escalation of the situation.

    Bessent said that although negotiations had not started, a deal is possible suggested people that attended a private event by JP Morgan Chase & Co. in Washington.

    Financial markets reaction to Bessent comments

    The DJIA has risen over 1,000 points to 39,200 as risk appetite improved. Gold prices tumbled below $3,400, down more than 1%, and the US Dollar gained over 0.39%, according to the DXY, which is up at 98.70.

    In the FX space, the EUR/USD fell below 1.1450, down 0.4% and the GBP/USD stays below 1.3360 down 0.15%.

    Gold daily chart

    US-China Trade War FAQs

    Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.

    An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.

    The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.

     

     



    Source link