This was the lowest reading in the current economic cycle and the lowest since 1973 which maintained confidence in a very firm labour market and expectations that the Federal Reserve would move to tighten policy in the short term.
Fed Governor Powell maintained an optimistic tone on the outlook and stated that the Fed was very close to meeting its 2% target while a rate increase is on the table for discussion at the March FOMC meeting.
Increased expectations of a March Fed tightening continued to support the dollar, although the Euro did find some support on approach to the 1.0500 level as markets had already moved closer to pricing in a US rate hike with futures markets indicating over a 75% chance of a move.
The Euro found some support at the 1.0500 area without making any significant headway as markets waited for comments from Fed Chair Yellen and Vice-Chair Fischer after the European close on Friday.
Weren’t Tariffs USD Negative? The Dollar proved sensitive to headlines regarding trade during the US overnight session. However, contrary to what many commentaries would have you believe, as the risk of tariffs escalated the Dollar rose. The 90-day pause following Trump’s April ‘liberation day’ tariffs had been set to expire this coming Wednesday. To the […]
Dollar Reserves With the passing of Trump’s original deadline for the reimposition of liberation day tariffs yesterday, markets have breathed a sigh of relief. July VIX futures continued to slide lower. Moreover, what may surprise anyone who had been expecting the issue of tariffs to resurface following the passing of Trump’s new deadline, so too […]
Big Girls Don’t Cry A bond market tantrum and one of the sharpest one day sell offs in Sterling for several years appear to have been catalysed by the Chancellor’s appearance in PMQs yesterday. First: the back story. This Labour government has faced some embarrassment in recent weeks trying to get its welfare bill through […]