The exchange market is in effervescence. While the American federal reserve maintains a cautious posture on interest rates, the dollar sinks to the main currencies. In a context of economic uncertainty, between increased inflation and commercial tensions revived by Donald Trump, investors and analysts scrutinize each declaration of the president of the Fed, Jerome Powell. His intervention in front of the Senate confirmed that the monetary institution would not precipitate the drop in rates, despite market expectations. In parallel, the announcement of new protectionist measures by the American executive feeds fears of a hardening of the global economic climate.
Powell slows down expectations on rates, the dollar is falling
“The American economy is strong overall,” said Jerome Powell during his hearing in front of the Senate this Tuesday, February 11, 2025. He thus justifies the wait -and -see attitude of the federal reserve in matters of monetary policy. Despite an inflation rate still higher than the 2 %objective, the Fed does not provide new short -term rate decreases. Market anticipations now reflect a monetary relaxation limited to 35 base points by the end of the year, a single full reduction and a possible second partial. Faced with this cautious posture, the dollar lost 0.17 %, and was 108.18 on the greenback index.
The eyes are now turning to inflation figures for January, expected this Wednesday. If this data confirms the persistence of high inflation, they could force the Fed to prolong its restrictive approach, which would thus limit any hope of an aggressive cycle of rates. Powell will continue his intervention in front of the House of Representatives, a new test for the market, which will try to refine its anticipations on the American monetary trajectory.
Trump relaunches the trade war, the euro and the raw materials in ambush
In parallel, the market must deal with a new protectionist escalation. Donald Trump announced a 25 % increase in customs duties on all imports of steel and aluminum, which revives the spectrum of a trade war with the European Union. “The threat of new American taxes remains, including against the European Union. A response could even lead to an extreme world trade war scenario, ” alert Athanasios Vamvakidis, Forex research manager at Bank of America.
These announcements immediately caused reactions to the foreign exchange market. The euro increased by 0.22 %, and reached $ 1,033, while the Japanese yen lost ground against the dollar, and fell 0.3 % to 152.45. In this uncertain environment, investors are turning to the shelters, especially gold, which benefits from a renewed interest. Volatility also affects the cryptos sector. Bitcoin fell 0.40 %, exchanging $ 96,192.60.
While the Fed maintains the course and the White House hardens its commercial approach, tensions increase in the world markets. A possible escalation of protectionist measures could amplify inflationary pressures in the United States and further weaken global growth. The evolution of the economic climate will now depend on the next Powell statements and the countermeasures adopted by the trade partners of Washington.
Maximize your Cointribne experience with our 'Read to Earn' program! For each article you read, earn points and access exclusive rewards. Sign up now and start accumulating advantages.
