The US Dollar (USD) faced another day of weakness against its major rivals on Tuesday, with the USD Index plunging to its lowest level since early December. This decline comes amid rising concerns over slowing US economic growth and the impact of new Chinese stimulus measures. As the USD hovered near a three-month low, market participants turned their attention to forthcoming data releases and policy statements that could further influence currency dynamics.
In the US, the economic calendar is set to feature Factory Orders data for January. Additionally, the Federal Reserve will publish its Beige Book, offering insights into the nation's economic conditions. These events are likely to provide investors with fresh perspectives on the US economy's trajectory and the potential implications for monetary policy.
On the other side of the Pacific, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser remarked early Wednesday that global trade uncertainty had reached levels not seen in 50 years. Despite these challenges, Australia's economy showed resilience, with its Gross Domestic Product (GDP) expanding at an annual rate of 1.3% in the fourth quarter.
Meanwhile, Mexico emerged as the leading exporter, recording a total of $466.6 billion in exports, as per the US Census Bureau. This highlights Mexico's robust trade performance amid global economic fluctuations.
In financial markets, the Dow Jones Industrial Average (DJIA) and the S&P 500 indexes both witnessed declines exceeding 1% on Tuesday. These losses reflected investor apprehension about economic prospects and potential policy shifts.
US President Donald Trump reiterated his administration's stance on imposing tariffs on products not manufactured domestically. This announcement reinforced his commitment to supporting the US economy and American producers, particularly in the run-up to the presidential election in November 2024.
However, US Commerce Secretary Howard Lutnick suggested that President Trump might be considering a shift in his own tariff policies less than 48 hours after implementing them. This potential policy pivot adds another layer of complexity to an already uncertain economic landscape.
The US Dollar exhibited particular weakness against the Euro. The EUR/USD pair extended its gains above 1.0650 during the European session on Wednesday, reflecting the Euro's strength against a faltering USD. In contrast, the USD/JPY pair managed a decisive rebound, last seen trading above 149.50.
Across the Atlantic, Bank of England Governor Andrew Bailey is scheduled to testify before the Treasury Select Committee. His remarks are anticipated to shed light on the BoE's monetary policy approach amid ongoing economic uncertainties.