USD held firm during yesterday's quiet trading session, riding on the back of President Trump's tariffs order. Twenty-five percent tariffs on steel and aluminium imports will be imposed, starting from 12th March.
CAD and EUR were broadly weaker. Overnight, Trump warned that these tariffs could go higher.
*Daily move - against G10 rates at 7:30am, 11.02.25
** Indicative rates - interbank rates at 7:30am, 11.02.25
There's very little on the data front today, but traders will be waiting for Federal Reserve (Fed) Powell's semi-annual congressional testimony this afternoon UK time. Markets are expecting a cautious approach by the Fed chair, with an insistence that the economy is strong and that the Fed can afford to hold interest rates steady. Markets are not pricing in another rate cut by the Fed until September. Any hawkish tones will continue to support USD.
GBP is starting the day weaker with Bank of England's (BoE) Catherine Mann telling the Financial Times that the BoE should have cut rates by 0.5% last week, citing a weak job market and lower consumer demand. A recent Bank of America report showed that unemployment expectations rose to a two-year high in January. A separate report by the Recruitment and Employment Confederation showed that job postings by companies are being pared back at their steepest pace since the pandemic in 2020 and are increasingly turning to redundancies.
Catherine Mann is set to speak again later today, as is BoE Governor Bailey, who will likely be more cautious in his suggestions of further monetary easing.
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