After hitting three-year lows against a range of currencies on Tuesday, the dollar has begun to rally. In the past 24 hours, it has gained 0.75% on sterling, ending a near 13-day losing streak, and 1.2% on the euro.
As we came out of the Easter weekend, the fresh source of the dollar’s decline was US president Donald Trump’s attacks on US Federal Reserve chair Jerome Powell. Trump threatened to find a way to remove Powell because of his refusal to cut interest rates, despite his term as chair not coming to an end until May 2026.
However, yesterday, Trump eased the pressure on the Fed, saying he has “no intention” of firing Powell. This change of messaging immediately saw S&P 500 and Nasdaq shares rise and the dollar begin to ascend.
Though, as a sign that the global economic instability is far from over, gold hit a new high of $3,500 per ounce yesterday and the IMF cut its forecast for global growth by 0.5%, and US growth in particular by 0.9%.
While the pound is falling from its peaks against the dollar, which came close to reaching a two-year high yesterday, it is recovering some of the ground lost to the euro in the past month. In the past day it climbed 0.45%, taking it 0.1% up on where it was a week ago, though overall the pound is still more than 2% down over the past 30 days.
UK chancellor Rachel Reeves is in Washington and allegedly on the cusp of signing a trade deal with the US that would reduce the tariffs on UK steel, aluminium and cars. While it would be a great boon to the UK, the deal is not yet done and this wouldn’t be the first time the White House has walked away from a ready-to-sign agreement.
This morning, S&P will release its UK manufacturing and services PMIs. These surveys will reveal the impact of all the recent economic turmoil on two of the UK’s major industries. Both are forecast to dip.
Ahead of the S&P data, HCOB is due to publish its own survey of German manufacturing. Also forecast to dip, the PMI figures will show how hard Trump’s tariffs have hit one of the Europe’s most profitable industries.
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