From Marc Chandler at Bannockburn Global Forex:
Overview: The US dollar recorded lows for the month against many of the major currencies yesterday but has come back bid today. We had anticipated some consolidation ahead of the conclusion of the FOMC meeting tomorrow, and the dollar's downside momentum faded. Yet, today’s gains have been fueled by new tariff threats. In particular, Bessent, the new Treasury Secretary, said to be a moderate, reportedly was advocated increasing a universal tariff by 2.5% a month until reaching the levels President Trump advocated, ostensibly allowing time for business and countries to adjust (?) and provide negotiating opportunities. However, President Trump warned 2.5% may not be sufficient and soon tariffs will be announced on semiconductor chips, pharmaceuticals, steel, copper, and aluminum. The greenback is higher against all the G10 currencies. Most of the currencies are off 0.4%-0.6%, but the Canadian dollar and Norwegian krone, which are 0.2%-0.3% lower. Most emerging market currencies are softer.
Many Asia Pacific equity markets are closed today, but most that were open traded lower. India and Singapore are noted exceptions. Europe's Stoxx 600 is snapping two days of slippage and is up 0.7% to new record highs. After sharp losses yesterday, the S&P 500 and NASDAQ futures are trading firmer (~0.35%-0.65%). While equities in Europe and the US are higher, it has sapped the bid from the bond market. Benchmark 10-year yields are a little firmer in Europe and the 10-year US Treasury yield is up 3.5 bp to almost 4.57%. Ironically, gold seemed to have been dragged lower by drop in equities yesterday, and its 1% loss was the largest in a month. It has stabilized today and hovering around little changed levels near $2742. March WTI is also stabilizing in quiet trade today after falling 2% for the second time in five sessions. It has mostly held above the ~$73.15 settlement but had not been able to retake $74....
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