As the market regroups ahead of the US inflation measure, major currencies consolidate

The U.S. dollar held steady against major currencies on Wednesday as investors continued to assess President-elect Donald Trump's tariff proposals while awaiting a key U.S. inflation report later in the day.

The New Zealand dollar strengthened after the Reserve Bank of New Zealand lowered its benchmark interest rate by 50 basis points to 4.25%, noting that inflation had eased toward the midpoint of its target range.

Trump’s Monday announcement of significant tariffs on Canada, Mexico, and China—America’s three largest trading partners—caused market unease, although some of the initial reaction softened later in U.S. trading hours.

"Markets are likely to stay on edge as a second Trump administration reintroduces uncertainty about U.S. policymaking," said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY). "This uncertainty may prompt markets to adopt a 'sell first, ask questions later' approach, which typically benefits the USD."

Against the Canadian dollar, the greenback was stable at C$1.4052, retreating from Tuesday’s 4.5-year high of C$1.4178. It also pared gains against the Mexican peso, following a surge to its highest level since July 2022 earlier in the week. Against the Chinese yuan, the dollar touched its strongest level since late July during Tuesday’s session.

In the Middle East, a ceasefire agreement between Israel and the Iran-backed Hezbollah group, brokered by the U.S. and France, is set to take effect on Wednesday. The Israeli shekel reached a three-month high on Tuesday.

Meanwhile, the yen held its recent safe-haven gains amid geopolitical tensions, with the dollar slipping 0.19% to a two-week low of 152.81 yen.

The dollar has faced volatility in recent sessions, initially declining after Trump’s late Friday decision to name hedge fund manager Scott Bessent as U.S. Treasury secretary, before rebounding sharply on his tariff announcements. The dollar index, which tracks the greenback against six major currencies, was last down 0.07% at 106.83.

Investors are now turning their attention to the October Personal Consumption Expenditures (PCE) price index, due for release later on Wednesday.

Minutes from the Federal Reserve’s November meeting, released Tuesday, revealed that many policymakers agreed on gradually easing policy restraint.

The euro traded flat at $1.0493, while the British pound rose slightly to $1.25735, up 0.05%. The Australian dollar remained largely unchanged at $0.64755 after domestic inflation stayed at a three-year low in October.

In the cryptocurrency market, bitcoin was trading at $91,795, remaining below last week’s record high of $99,830. Despite struggling to breach the $100,000 psychological barrier due to profit-taking, bitcoin has risen over 40% since the U.S. election on optimism that Trump will relax regulatory measures for cryptocurrencies.

 

 

 

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.