Markets rebounded sharply yesterday following Monday's sell-off, with the dollar also recovering some of its earlier losses caused by Trump's threats to fire Fed Chair Jerome Powell.
The improved sentiment was supported by Scott Bessent's comments that he sees trade tensions with China de-escalating as the current stand-off is unsustainable. Bessent’s comments were further supported by Donald Trump who said he’ll be “very nice” to China and tariffs will drop substantially should a deal be reached between the US and China.
The dollar drew additional support after Trump went back on his word from the weekend, now to say that he doesn't plan on firing Jerome Powell.
*Daily move - against G10 rates at 7:30am, 23.04.25
** Indicative rates - interbank rates at 7:30am, 23.04.25
Trump's comments have eased some pressure off the USD overnight. Further reports that the White House is close to agreements with Japan and India, and in talks with the UK, is also helping the dollar's case. As a result we’re seeing some EUR weakness.
PMI numbers from the EU, UK and US are due out for release later today. Considering how concerning tariffs have been for the US economy, all eyes will be on the US numbers. There has been chatter amongst some trading desks suggesting that the dollar could be due for a rebound driven by technical indicators and market positioning; and that the moves on Monday were exacerbated by thin liquidity conditions. Yesterday's rebound is evident of that, however data showing improvements will be needed if the overnight moves on the dollar are to persist.
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