The US dollar rose in European trade on Tuesday against a basket of major rivals, holding above three-year lows and on track for the first profit in four days on short-covering. 

Several Fed officials expressed increasing concerns about Trump’s tariffs and their impact on the economy, and hinted at the necessity of maintaining rates unchanged until the dust clears.

The Index

The dollar index rose 0.35% today to 99.98, with a session-low at 99.48.

On Monday, the index lost 0.15%, the third loss in a row, hitting a three-year nadir at 99.01.

Fed Remarks 

Federal Reserve official Christopher Waller wanted that recession risks outweigh inflation risks, and if current average 25% tariffs continued, inflation could hit a peak of 5%.

Atlanta Fed President Raphael Bostic also warned from ongoing uncertainty due to tariffs and other policies that could push the economy into recession.

Fed Rates

According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in May stood at 17%.

The odds of such a cut in June stood at a much bigger 73%.

Now investors await important US data and additional remarks by Fed officials to gather more clues on the future of monetary policies.

Gold prices rose in European trade on Tuesday, resuming gains and approaching record highs as haven demand spikes.

The precious metal is holding its ground above the historic $3200 barrier amid uncertainty about US President Donald Trump’s tariff plans.

The Price

Gold prices rose 0.7% today to $3232 an ounce, with a session-low at $3210.

On Monday, gold lost 0.85% on profit-taking, the first such loss in four sessions, moving away from a record high at $3245. 

Trade Developments 

US President Donald Trump exempted cell phones, computers, chips, and other electronics from his reciprocal tariffs, removing the pressure on tech companies. 

Federal Reserve official Christopher Waller wanted that recession risks outweigh inflation risks, and if current average 25% tariffs continued, inflation could hit a peak of 5%.

Atlanta Fed President Raphael Bostic also warned from ongoing uncertainty due to tariffs and other policies that could push the economy into recession.

According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in May stood at 17%.

The odds of such a cut in June stood at a much bigger 73%.

SPDR

Gold holdings at the SPDR Gold Trust remained unchanged yesterday at 953.15 tons, the highest since September 20, 2022.

The New Zealand dollar rose in Asian trade on Tuesday against a basket of major rivals, heading for the fifth straight profit in a row against the US dollar and scaling November 2024 highs as the risk appetite improves worldwide.

US President Donald Trump exempted cell phones, computers, chips, and other electronics from his reciprocal tariffs, removing the pressure on tech companies. 

The gains are also boosted by the reducing odds of a RBNZ rate cut in May as the New Zealand central bank prefers to take more time to analyze local and international developments.

The Price

The NZD/USD price rose 0.75% today to $0.5915, the highest since November 2024, with a session-low at $0.5861.

The pair closed up 0.9% on Monday, the fourth profit in a row, and the longest such streak of gains since early March following strong Chinese exports data.

Positive Sentiment 

Financial markets opened the week with a positive stance after Trump’s new tariff exemptions for a variety of tech products.

It comes after he suspended his reciprocal tariffs on most countries for 90 days to give time for negotiations.

New Zealand Rates

The odds of a New Zealand 0.25% interest rate cut in May tumbled from 90% to 60%, with investors now waiting for inflation data later this week to gather more clues.

Oil prices rose on Monday after positive Chinese data showed increasing demand last month.

Official data showed China’s crude oil imports rose 5% last month y/y to 51.41 million tons, equivalent to 12.1 million bpd, the highest since August 2023.

In comparison, China imported 10.38 million bpd on average in the first two months of the year, with the increase in imports last month boosted by Iranian, Russian imports.

OPEC reduced its outlook for global oil demand growth this year to 1.3 million bpd from 1.45 million bpd, and next year to 1.28 million bpd from 1.43 million bpd.

On trading, Brent June futures rose 0.2%, or 12 cents to $64.88 a barrel.

US crude futures due in May added 3 cents to $61.53 a barrel.