By Simon Eastman
The dollar was the focus for traders yesterday as the greenback made gains across the board on the back of fresh trade tariffs announced by the Trump administration.
Those with sterling or euros in hand, buying USD found their costs jumped up by a cent against both as Trump threatened to impose hefty tariffs on computer chips and other industries such as pharma, steel, aluminium, and copper if they were not produced in the US.
This followed the day after US AI tech giant NVidia’s stock price was crucified, losing nearly $600 billion from its share price on Monday as Chinese AI start-up DeepSeek announced its AI capabilities were as good, if not better than the US counterparties, but at a fraction of the cost, throwing tech stocks into freefall. As the tech war erupted, traders ran for the safety of the dollar.
Tuesday had little data for traders to work with until US durable goods came out in the afternoon. Despite coming out lower than the expectations, with traders firmly behind the dollar, rates against sterling and the euro stayed flat over the rest of the afternoon. Sterling euro traded up at 2-week highs ahead of the European Central Bank meeting tomorrow, where there is speculation the bank will cut interest rates.
Today is another quiet morning for data, with nothing of note for the UK or EU. Bank of England governor Bailey makes a speech at 14.15 ahead of the Bank of Canada’s interest rate meeting, policy report and statement at 14.45. The Bank is expected to cut interest rates by 25 basis points to 3 percent, which could see the Loonie weaker as a result depending on how much the markets have priced in a cut. Those looking to buy CAD might want to look at trading this morning to avoid the risk. The subsequent press conference at 15.30 could shed further light on the Bank’s ongoing policy stance, again affecting exchange rates as the meeting goes on. Finally, the day rounds off with the Federal Reserve’s interest rate meeting, policy statement and press conference at 19.00 and 19.30 respectively.
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