- The US dollar index is still under pressure, as concerns about economic repercussions are directed at the customs tariff for the United States.
- The CME Fedwatch tool shows that merchants now expect the first reduction in the Federal Reserve in July.
- President Trump stated that a trade agreement with China can be completed within the three weeks to the next four.
The US dollar index (DXY), which measures the US dollar (USD) against a basket of six main currencies, remains less than 99.50 during the first European hours on Friday. Greenback remains defeated amid increasing concerns about the economic impact of definitions on the United States (the United States). The market participants are closely monitoring developments in the American commercial negotiations, although it is expected that the trading activity is expected to be subject to the great Friday holiday.
However, the US dollar received some support after the Falcons’ statements from the Federal Reserve Chairman Jerome Powell, who warned that the slow economy besides continuous inflation could complicate the goals of the Federal Reserve policy and increase the risk of stagnation. Meanwhile, President Donald Trump Powell criticized for being too slow to reduce interest rates, adding that his removal “could not come quickly enough.”
According to CME Fedwatch Tool, Capital Market traders are currently pricing about 86 basis points of discounts in interest rates at the end of 2025, with the expectation of the first discount in July.
US President Donald Trump said on Thursday that China has provided multiple initiatives and added: “I do not want to exceed the Chinese definitions. If the Chinese tariffs rise, people will not buy.” Trump has been optimistic that a trade agreement with China can be reached within three to four weeks.
On the Labor Front, the US Department of Labor stated on Thursday that the initial unemployment claims decreased to 215,000 for the week ending April 12, less than expectations and a decrease in the revised number in the previous week of 224,000 (223,000 originally). However, the unemployed demands for continuous work increased by 41,000 to 1.885 million for the week ended on April 5.
Questions and answers in US dollars
The USD (USD) is the official currency of the United States of America, and a “reality” currency for a large number of other countries where there is a circulating alongside local notes. It is the most trading currency in the world, as it represents more than 88 % of the rotation of global foreign currencies, or on average $ 6.6 trillion in transactions per day, according to data from 2022. In the aftermath of World War II, the United States took over the British pound the world reserves. For most of its history, the US dollar was backed by gold, even the Bretton Woods agreement in 1971 when the golden standard went.
The most important individual factor that affects the value of the US dollar is the monetary policy, which is formed by the Federal Reserve (Fed). The Federal Reserve has two states: to achieve price stability (control of control) and enhance full employment. Its primary performance to achieve these two goals is to adjust interest rates. When prices rise very quickly and inflation is 2 % higher than the Federal Reserve goal, the Federal Reserve will raise rates, which helps the value of the dollar. When inflation decreases to less than 2 % or the unemployment rate is very high, the Federal Reserve may reduce interest rates, which weighs to green.
In maximum situations, the Federal Reserve can also print more dollars and quantitative mitigation (QE). QE is the process that the Federal Reserve increases significantly from the flow of credit in a suspended financial system. It is a measure of the non -standard policy used when the credit is dry because banks will not lend to each other (for fear of failing to pay the opposite end). It is the last resort when it is unlikely to achieve interest rates simply the necessary result. The Federal Reserve is the preferred to combat the credit crisis that occurred during the great financial crisis in 2008. It includes the printing of the Federal Reserve more dollars and their use to buy US government bonds mostly from financial institutions. QE usually leads to the weakest US dollar.
The quantitative tightening (QT) is the opposite process in which the Federal Reserve stops buying bonds from financial institutions and does not invest the manager from the bonds he holds in new purchases. It is usually positive for the US dollar.
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