The US Dollar Index rose by more than half a percent on Thursday, as investors were back pricing in heavy import duties on some of America’s largest trade partners.
We do note, however, that the moves have been relatively contained thus far, perhaps in the expectation that eleventh hour deals could be reached that would sidestep the imposition of these economically damaging trade restrictions.
Let’s not forget that investors have also been burnt before, and have perhaps learnt not to overreact to Trump’s remarks, which in the past have transpired to be largely bluster and little action.
Economic news out yesterday was mixed, albeit largely overlooked by investors given the enormity of Trump’s trade remarks.
Weekly jobless claims rose sharply, partly due to the temporary impact of DOGE cuts (up to 242k from 221k), and pending home sales also sank (-4.6% MoM).
Durable goods orders rose solidly, however, (+3.1%) in a welcome sign of resilient domestic demand, following on from the recent disappointing retail sales print.
Focus today will be largely on this afternoon’s PCE inflation figures.
