The US dollar index (DX-Y.NYB) faces downward pressure as investors struggle to interpret the Trump administration's trade policies. A new concept dubbed the "Mar-a-Lago accord" has emerged on Wall Street, a proposal by President Trump to reform global trading, address economic imbalances, and "prevent the overvaluation of the dollar." DZ Bank Head of Monetary Policy and FX Research Sonja Marten joins Morning Brief anchors Seana Smith and Brad Smith to analyze these developments. "It's really difficult to look through the very confused messaging we've been getting here," Marten says about the White House, describing Trump's first month as "difficult." "I think when you look at the market reaction (^DJI, ^IXIC, ^GSPC) ... there's been some movement, but I think investors are really really struggling to see clear headway," she explains, noting that markets are attempting to balance potential economic impacts against determining which White House statements should be taken seriously. Regarding specific tariff policies, Marten emphasizes that today's environment differs significantly from 2016. The current tariffs were implemented immediately upon Trump taking office, and the "level" of tariffs is considerably more severe than during his first presidency. She adds, "I think we have a much more determined Trump to deal with." "A lot of people presume that Trump barks, but he won't bite," Marten states, warning, "I think the market is underestimating and underpricing this risk." To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. This post was written by Angel Smith
Rising tariffs, lower growth, higher defence spending, deeper political fragmentation and rising dollar-denominated borrowing costs are set to weaken the European credit outlook unless Europe unites and makes bold reforms.
The new government coalition provides an opportunity to address Belgium’s fiscal challenges, although the trade-offs between budgetary consolidation and the administration’s social and economic agendas could slow reform.
Expectations for the Fed’s next cut shift back to July.
Tariffs and politics remain in focus.
The data poses an interesting question for the the European Central Bank, which is expected to implement back-to-back interest rate cuts until July.
The Fed’s lower dovishness seems to be priced in while other major central banks mostly loosen policy.
Despite a generally strong job report, the pound has held close to recent lows.
The U.S. dollar has been appreciating almost relentlessly since the end of September.
The US dollar edged higher Friday, but was on course for a weekly loss after core inflation eased, while sterling retreated following the release of weak retail sales data. At 04:30 ET (09:30 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher to 108.930, but was set for a drop of about 0.5% in the week, which would snap a six-week winning streak. The dollar has retreated this week after cooler than expected inflation data raised the possibility of easier monetary policy this year, even after policymakers at the Federal Reserve indicated they would be cautious in its approach to cutting rates this year.
Traders’ attention now shifts to the Fed’s meeting and press conference.
Lithuania is set to outperform Estonia and Latvia fiscally and economically in the short to medium term, driven by structural, cyclical and policy-related factors.
The euro’s downtrend continued on Friday as more economic data supported the outlook for another European Central Bank rate cut in December.
While the overall inflation returned to the ECB's target, core inflation — a measure which strips out volatile elements — is at 2.7%.
As challenging as France’s fiscal and political outlooks are, the country’s underlying areas of resilience include a favourable government debt profile, a resilient economy and well capitalised banks.
The dollar index has rallied since Republican candidate Donald Trump won the US presidential election. His win has changed the fiscal and monetary policy outlook, favoring the greenback.
Germany needs a stable and reform-oriented government to respond to the impact of US president-elect Donald Trump’s potential policy shifts that will impact Germany’s trade, fiscal and defence policies.
Donald Trump’s emphatic victory in the US presidential elections is a net negative for US risks over the medium run because it raises financial risk, although nearer-term implications for the economy are more mixed.
The preliminary figure for growth in the third quarter is 2.8%, 0.2% below the consensus.
Georgia’s coming elections highlight its tough balancing act between the West and Russia. Competing visions for the nation’s future, challenging geopolitics and sanctions risks threaten the sovereign’s ratings.