USD: Dominant tariff factor buoys the dollar – ING
28.02.2025, 09:59

USD: Dominant tariff factor buoys the dollar – ING

Just as we were discussing the diminishing impact of tariff rhetoric on FX markets, President Trump yesterday emphatically delivered 4 March as the date on which tariffs would go into effect, ING’s FX analysts Chris Turner notes.

DXY can move up to 108 today.

"Financial markets have responded. The US Dollar (USD) is firmer against most currencies, equity markets are down - and down quite sharply at 3% in Japan and Korea - and bond markets have seen a little bull flattening consistent on the back of lower growth expectations."

"We are keeping one eye on the sharp fall in crypto this week. The MVDA index, a basket of the 100 largest digital assets, has fallen 20% this week. Given the prevalence of crypto across US households, any further sharp fall and the threat of broader asset market deleveraging strongly favours defensive positioning in FX."

"A soft January real spending figure and a downside surprise to the core PCE deflator could prove a mild USD negative. And we also see the January advanced trade release today. Another monthly deficit around $110-120bn should be a reminder that Trump means business as he seeks to correct the goods deficit which last year stood at a staggering $1.2tr. Given DXY is heavily weighted towards European currencies, look for a move up to 108 today. However, the yen should outperform on the crosses."

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