The U.S. Dollar is trading in mixed ranges as markets cope with some of the steepest losses in years across market classes, resulting from fears over tariffs, which are to be implemented starting Wednesday.
Overview
Following “Liberation Day,” or the announcement of reciprocal tariffs and a global 10.0% baseline for all goods from everywhere, equities have plummeted, with U.S. equity value at the lowest since the end of 2023.
The market deterioration is likely to continue today as the White House has explained that there are no plans to back away from any of the proposed increases in the costs of commercial trade. While the S&P 500 Index has lost 20.0% of its value since its record on February 19th, the MSCI emerging-market stock index dropped by 7.9% within a trading session, marking its worst intraday loss since 2008, when the financial crisis began. Oil prices are also slashed with Brent Crude now at a four-year low.
The Buck does not know exactly where to head, with idiosyncrasies taking over. The Euro and Yen are up while the Sterling and Mexican Peso dwindle. Economists as well as investors are pondering if the Federal Reserve will need to jump in and now bets of officials making cuts have gone up. Chances of a cut for their May 7th meeting are now above 50.0% while June stands at 95.0%. Treasury yields and prices are all over the place here and across the pond. With data dry in the next two days, we look forward to the Minutes from the Fed’s last gathering out on Wednesday at 2 PM. Gauges of inflation will be out the latter part of the week.
What to Watch This Week…
- Fed Minutes Wednesday 2 PM
- US CPI Thursday 8:30 AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
MXN ⇓
The Mexican Peso is losing value fast, tanking to the point of almost hitting multi-year lows against the Dollar as tariffs threaten to put a choke on the Mexican economy. Already seeing anemic growth, Mexico will need to negotiate in order not to face too many headwinds as its products primarily end up in the U.S. LATAM losses across the board average over 3.0% since the start of the month.
JPY ⇑
The Japanese Yen has jumped by about 2.5% in the past three days even touching its strongest point over the Buck since October of last year. The safe-haven asset has been the favored go-to as investors try to figure how a new world with tariffs on almost everything will force recessionary pressures. While navigating that new reality, the Yen is quickly becoming a trusted reserve currency that can also give good returns down the line if the Bank of Japan sees it fit to combat inflation with hikes to their interest rates.
