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The US Dollar consolidates ahead of this week’s close.  The weekend is expected to be an eventful one with Saturday, the US being set to impose tariffs on Mexico and Canada.  The US Dollar Index (DXY) moves further away from 108.00 and resides near the fresh weekly high at 108.37.  The US Dollar Index (DXY), which tracks the performance of the US Dollar against six major currencies and currently trades at 108.35 at the time of writing, is heading higher on Friday after receiving quite a few tailwinds just ahead of the weekend. The first tailwind comes from US President Donald Trump, who announced a first wave of tariffs on Mexico and Canada. The Trump administration will impose 25% tariffs on about $900 billion in goods from both Canada and Mexico, Bloomberg reports. The US President also threatened to impose 100% tariffs on BRICS nations if they try to replace the US Dollar with a new currency in international trade.  The second tailwind comes from the rate differential between the US and several other countries. For example, this Friday the German inflation release boosted rate cut bets for the European Central Bank (ECB). This drives a bigger wedge between US yields and European ones, fueling a stronger US Dollar.  Unfortunately, the recent release of the Personal Consumption Expenditure (PCE) data for December was unable to further widen that rate differential. With all element roughly in line of expectations, the PCE release turned into a non-event.  Daily digest market movers: Monday might be tricky Asian markets remain quiet this week due to the Lunar New Year, which started on Tuesday, with Chinese traders returning to the markets on February 5.  Volatility and nervousness are expected at the opening trade on Monday if US President Trump finally unleashes 25% tariffs on Canada and…

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Filed under: News - @ January 31, 2025 6:17 pm