Federal Reserve (Fed) Bank of Richmond President Tom Barkin pummeled market hopes for rate cuts on Wednesday, noting that the Fed is broadly anticipating negative effects from both ends of the US's self-styled trade war.
Federal Reserve (Fed) Bank of St. Louis President Alberto Musalem noted on Wednesday that tariffs will make it increasingly difficult for the Fed to make short-term changes to policy rates.
The Mexican Peso (MXN) extended its losses against the US Dollar (USD) as US-China tensions escalated after the US imposed further tariffs on Chinese imports, while the latter retaliated reciprocally. Volatility remains high and usually undermines risk appetite, sending the Peso lower.
Pound Sterling (GBP) is up a modest 0.5% vs. the US Dollar (USD) and retracing a portion of its recent losses, Scotiabank's Chief FX Strategist Shaun Osborne notes on Wednesday.
The Euro (EUR) is up an impressive 0.8% vs. the US Dollar (USD) and outperforming most of the G10 currencies with the exception of AUD and CHF, recovering its recent losses and pushing back toward last week’s highs, Scotiabank's Chief FX Strategist Shaun Osborne notes.
The Minutes revealed that Federal Reserve policymakers almost unanimously agreed that the U.S. economy was at risk of experiencing both higher inflation and slower growth. They noted that “difficult tradeoffs” could lie ahead for the central bank.
Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, warned on Wednesday that last week’s wide-ranging tariffs could unsettle people’s expectations about inflation.
Canada’s 25% counter tariffs on non-USMCA compliant vehicles came into force just after midnight, Scotiabank's Chief FX Strategist Shaun Osborne notes.
Yesterday’s hopes for some moderation in US tariff policy met the reality of 104% tariffs on China and President Trump’s other levies being imposed as of midnight last night, Scotiabank's Chief FX Strategist Shaun Osborne notes.
In an interview with Fox Business Network on Wednesday, US Treasury Secretary Scott Bessent said China's decision to raise tariffs on US imports to 84% is "unfortunate," per Reuters.
USD/JPY dipped this morning. Safe-haven demand was the main catalyst while UST-JGB yield differentials also narrowed. Pair was last at 144.74 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note, OCBC's FX analysts Frances Cheung and Christopher Wong note.
The USD/CAD pair falls sharply to near 1.4180 during European trading hours on Wednesday. The Loonie pair faces an intense sell-off as the US Dollar (USD) takes bullet for United States (US) President Donald Trump raising import duty on China to 104%.
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