US dollar edged slightly higher on Wednesday.
The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is gradually rising and recovering above the 107.00 level on Wednesday, with traders perceiving the DXY as well-positioned amongst the tariff and geopolitical concerns.
US President Donald Trump broadens tariffs to include pharmaceuticals and semiconductors.
Overnight, US President Donald Trump said that car tariffs would be around 25%, with pharmaceutical and semiconductor imports joining the plan by April. President Trump attempted to deflect the relatively unsatisfactory first day of negotiations between Russian and US officials on a peace accord for Ukraine, lashing out at the latter and maintaining that it is Ukraine’s responsibility that a deal has not been reached and will most likely be tough to achieve.
On the economic calendar, all eyes focused on the Federal Open Market Committee (FOMC) Minutes from the Federal Reserve’s (Fed) January policy meeting. The Minutes could provide some support to the US Dollar, which weakening because to lower US yields. A hawkish Minutes might raise US rates again, eliminate chances or odds of interest rate decreases in 2025, and result in a higher Greenback.
Daily digest market movers: Mortgages plunge, US Dollar Index (DXY) recovered over 107.00 and is still looking for direction this week.
Weekly Mortgate Applications have already fallen significantly this week, down 6.6% compared to last week’s performance.
Before facing the Fed’s latest FOMC Minutes, some data on the US housing sector released.
January building permits increased to 1.483 million units, exceeding the 1.460 million projection and up from 1.482 million in December.
Housing starts dipped to 1.366 million in January, missing the 1.4 million estimate, down from 1.499 million.
At 19:00 GMT, the Federal Reserve will deliver its January monetary policy statement. Any hawkish tilts or undertones could be enough to push out existing rate cuts for 2025, thus resulting in a higher US Dollar.
Equities are not having a very good day and are all in the red across Europe, US. The Shanghai Shenzhen Index is an anomaly, closing 0.7% higher despite President Trump’s expansion of tariffs to encompass medicines and chips.
The CME FedWatch program predicts a 53.5% chance that interest rates will remain steady in June.
The US 10-year yield is trading at 4.57%, the highest level this week.
