Market news
08.01.2025, 10:08

USD: Inflation resurgence concerns to drive a further hawkish tuning in the policy message – ING

Markets have been tempted in the past couple of days to believe there is some truth behind the Washington Post’s report – quickly rebuked by Trump – that US tariffs will be only on selected products. Markets are also looking with interest at the timeline for the US Congress’ plan to pass a three-in-one bill for taxes, border and energy. Speaker Mike Johnson has set a rather ambitious April deadline, and that could suggest the new administration will have to focus efforts on domestic policies and at least delay a large-scale protectionism program, ING’s FX analyst Francesco notes.

DXY to consolidate just below the 109.0 mark

“For now, markets have been left guessing on tariffs, which allowed the US macro story to take over and unmistakably offer support to the US Dollar (USD). Yesterday’s US data releases were hawkish for the Fed, and the implied probability of a March rate cut has now dropped below 40%. Treasuries had another soft session yesterday, and stocks slipped, adding support to the safe-haven USD.”

“Aside from the stronger-than-expected JOLTS job market opening and the headline ISM services index, the most remarkable print was the ISM prices paid subcomponent, which spiked to the highest level since January 2023. If a generally resilient economy was already accounted for when the Fed met in December, a resurgence in inflation concerns could drive an even further hawkish tuning in the policy message.”

“The details of December’s FOMC will be released in today’s minutes, which could throw a bit more support behind the USD. Expect also some reaction to the ADP payrolls, even if they seldom predict official payrolls. Maybe more importantly, there is a planned speech by Chris Waller at 1400 CET: let’s see if he joins other members in flagging lingering inflation risks. We could see opposing forces on the USD today, as the technical/positioning picture still points to correction risk, but the Fed/macro picture may well continue to attract USD bulls. We could see a consolidation just below the 109.0 mark in DXY.”

© 2000-2025. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location