US dollar gives up three-week high before growth data
The US dollar fell in European trade on Thursday against a basket of major rivals, giving up three-week highs on profit-taking amid concerns about a recession in the US economy following Donald Trump’s aggressive auto tariffs.
Now investors await important US data later today on GDP growth in the last quarter of 2024, in addition to unemployment claims data to gather more clues on the future path of Fed interest rates.
The Index
The dollar index rose 0.4% today to 104.25, with a session-high at 104.65.
On Wednesday, the index rose 0.45%, marking three-week highs at 104.68 as US yields rallied.
Trump’s Tariffs
US President Trump announced aggressive 25% tariffs on all cars not made in the US, to be implemented on April 2nd.
The tariffs will also include all foreign sourced parts, which represents a huge hit to the US car industry.
Trump’s move shook market confidence once more and could lead vehicle prices to rise by $10,000 on average according to some analysts.
US Rates
Minneapolis Fed President Neil Kashkari said even as the Fed achieved a log of progress in containing inflation, there’s still more work to do to bring inflation to the 2% target.
According to the Fedwatch tool, the odds of a May 0.25% Fed rate cut stood at 12%.
The odds of a similar cut in June stood at a much higher 65%.
Gold approaches record high amid tense trade atmosphere
Gold prices rose in European trade on Thursday towards recent record highs with higher haven demand amid surging global trade tensions after Donald Trump imposed aggressive tariffs on imported cars.
Now markets await important US data and remarks by Fed officials to gather more clues on the future path of Fed interest rates.
The Price
Gold prices rose 0.65% today to $3038 an ounce, with a session-low at $3017.
On Wednesday, gold was little changed, while rising 0.5% on Tuesday and approaching record highs at $3057.
Trump’s Tariffs
US President Trump announced aggressive 25% tariffs on all cars not made in the US, to be implemented on April 2nd.
The tariffs will also include all foreign sourced parts, which represents a huge hit to the US car industry.
Trump’s move shook market confidence once more and could lead vehicle prices to rise by $10,000 on average according to some analysts.
US Rates
Minneapolis Fed President Neil Kashkari said even as the Fed achieved a log of progress in containing inflation, there’s still more work to do to bring inflation to the 2% target.
According to the Fedwatch tool, the odds of a May 0.25% Fed rate cut stood at 12%.
The odds of a similar cut in June stood at a much higher 65%.
SPDR
Gold holdings at the SPDR Gold Trust remained unchanged yesterday at 929.36 tons.
Euro tries to recover as traders assess trade risks
The euro rose in European trade against major rivals, holding above three-week lows against the dollar and on track for the first profit in seven sessions.
It comes as traders assess the mounting trade risks after Trump’s new 25% tariffs on imported vehicles and auto parts.
The European Central Bank is on track to hold interest rates unchanged in April, with traders waiting for more eurozone data to gather more clues.
The Price
The EUR/USD price rose 0.3% today to $1.0787, with March 5 lows at $1.0732.
The euro closed down 0.35% on Wednesday against the dollar, the sixth loss in a row amid growing concerns about a weakness in the eurozone services sector in the first half of the year.
Trump’s Tariffs
US President Trump announced aggressive 25% tariffs on all cars not made in the US, to be implemented on April 2nd.
The tariffs will also include all foreign sourced parts, which represents a huge hit to the US car industry.
Trump’s move shook market confidence once more and could lead vehicle prices to rise by $10,000 on average according to some analysts.
European Rates
Reuters reported the European Central Bank policymakers see an increasing probability of a hiatus in the cycle of interest rate cuts at the next meeting, before resuming later on.
Traders reduced the odds of an ECB April rate cut to less than 50%.
