Nov 27 2024: The U.S. dollar held steady against its major peers on Wednesday as markets braced for a key U.S. inflation report while digesting President-elect Donald Trump’s renewed tariff threats on the country’s largest trading partners.
Trump Tariff Uncertainty Keeps Markets Cautious
Trump’s promises of significant tariffs on Canada, Mexico, and China, announced earlier this week, have sparked market volatility. Investors are concerned about the potential impact on global trade, though some analysts believe the tariffs could be part of negotiation tactics.
Carol Kong, a currency strategist at Commonwealth Bank of Australia, highlighted that the uncertainty surrounding Trump’s policies is keeping markets jittery, benefiting the U.S. dollar.
Dollar Movement Against Major Currencies
- Canadian Dollar (CAD): The greenback gained 0.15%, trading at C$1.40755, near its highest levels in 4.5 years.
- Mexican Peso (MXN): The dollar rose 0.3%, pulling back slightly from its strongest point since July 2022.
- Japanese Yen (JPY): The dollar weakened 0.47% to a near three-week low of 152.37 yen, as safe-haven bids and expectations for a December rate hike in Japan supported the yen.
- Euro (EUR): The euro slipped 0.10% to $1.0479.
- British Pound (GBP): Sterling was largely flat at $1.2570.
- Australian Dollar (AUD): The AUD ticked up 0.03% to $0.6476, buoyed by October inflation data showing prices at a three-year low.
- New Zealand Dollar (NZD): The kiwi rose 0.5%, trading at $0.58635.
The dollar index, which measures the greenback against six major peers, was last down 0.07% at 106.83, reflecting a mixed performance across currencies.
China’s Yuan Eases as Economic Worries Persist
China’s offshore yuan fell 0.11% to 7.2661 as weak industrial profits and tariff concerns weighed on sentiment. The onshore yuan slipped 0.08%, nearing its lowest point since late July.
Middle East Ceasefire Supports Israeli Shekel
A ceasefire between Israel and Hezbollah, brokered by the U.S. and France, came into effect early Wednesday. Following the announcement, the Israeli shekel reached a three-month high on Tuesday.
Cryptocurrencies: Bitcoin Struggles Below Key Level
Bitcoin edged up over 1% to $92,692, but remained well below its record high of $99,830 from last week. Profit-taking has prevented the cryptocurrency from breaching the psychologically significant $100,000 barrier.
Outlook: US Inflation Data in Focus
Markets await the Personal Consumption Expenditures (PCE) price index, a key inflation gauge for the Federal Reserve, which is due later in the day. The data is expected to influence rate outlooks, with the Fed’s November meeting minutes also in focus this week.
Currency strategists caution that uncertainty around Trump’s trade and economic policies could keep markets volatile in the near term.
