US Dollar rolls through markets after tariff plans threat is back on the table

LONDON (January 28) The US Dollar Index (DXY), which tracks the performance of the US Dollar against six different major currencies, edges higher in early Tuesday, trading slightly below 108.00 at the time of writing. The Nvidia rout from Monday, where Nvidia (NVDA) lost over $600 billion in market capitalization at one point, played into US President Donald Trump’s hand regarding his plan to impose a universal tariff. Markets even got more shaken up when t Trump advocated for a gradually increasing universal tariff plan, bigger than 2.5%. 

On the economic data front, all eyes are on the US Federal Reserve (Fed) and the European Central Bank (ECB), which will announce their first monetary policy decisions this year on Wednesday and Thursday, respectively. Ahead of those monetary policy meetings, preliminary reading for the US December Durable Goods is due later in the day. This will be a good litmus test to see how the US consumer is behaving at the moment ahead of any inflation readings.  

Daily digest market movers: US Consumer in focus

• Asian markets will quiet down this week and next. With the Lunar New Year starting this Tuesday, Chinese traders will return to the markets on February 5. 
• At 13:30 GMT, December US Durable Goods Orders data is due:
  • Headline Durable Goods Orders are expected to increase by 0.8% from -1.2% in November.
  • Durable Goods Orders without Transportation are seen rising 0.4% compared to -0.2% in the previous month. 
• At 15:00 GMT, the US Conference Board (CB) Consumer Confidence data for January will be released, expected to head to 105.7 from 104.7. Apart from that, the Richmond Fed Manufacturing Index for January should tick up marginally to -8 from -10.
• Equities are recovering from their steep correction seen Monday in the Nvidia (NVDA) rout spillover. Broadly, most European indices are recovering around 0.50%, and US equity futures are positive, with the Nasdaq leading the recovery. 
• The CME FedWatch tool projects a 51.2% chance that interest rates will remain unchanged at current levels in the May meeting, with the remaining 48.8% chance of a rate cut that month. Expectations are that the Federal Reserve (Fed) will remain data-dependent with uncertainties that could influence inflation during US President Donald Trump’s term. 
• The US 10-year yield is trading around 4.569% and starts its recovery towards the more-than-one-year high seen earlier this month at 4.807%.

FXStreet