Today’s markets analysis on behalf of Hassan Fawaz Chairman & Founder of GivTrade
The U.S. dollar remained under pressure as the euro climbed to a four-month high as Germany plans to launch a EUR 500 billion infrastructure fund and ease borrowing rules to boost defense spending and stimulate growth. In a significant policy shift, the parties negotiating Germany’s next government have agreed to ease the ‘debt brake’, aiming to revitalize an economy that has been struggling to grow.
However, ongoing trade tensions could provide support for the greenback as Canadian Prime Minister Justin Trudeau and Mexico’s President Claudia Sheinbaum announced retaliatory tariffs. Trudeau has announced a 25% levy on CAD 30 billion worth of U.S. imports, effective immediately, with an additional CAD 125 billion in levies forthcoming. Sheinbaum also confirmed retaliatory tariffs but has not disclosed details. However, US Commerce Secretary Lutnick hinted at a possible rollback on tariffs, weighing down on the US dollar.
Meanwhile, US treasury yields recovered from previous losses, with the 10-year note hovering above 4.2%, as investors await today’s ISM Services PMI data. Weak results could weigh on yields. Conversely, strong results may boost both yields and the dollar.