An increase of the indicator value may contribute to the rise in quotes of USD.
An increase of the indicator value may contribute to the rise in quotes of USD.
On Monday, the United States and China reached a temporary trade truce. According to a Bloomberg survey of analysts, such a decision will not prevent a slowdown in US economic growth, though it will reduce the risk of a full-scale recession.
According to statements by Federal Reserve (Fed) official Adriana Kugler, US President Donald Trump's tariff policy will increase inflation and negatively affect the country's economic growth. It will happen despite the recent reduction of duties against China.
According to Bloomberg, swap traders have lowered expectations for interest rate cuts by the US Federal Reserve (Fed) for the rest of this year. They now project the Fed to make just two steps in reducing borrowing costs in 2025.
American stock indexes rose and stabilized on the evening of May 12 following the announcement of a US-China trade deal. Traders' attention will now shift to upcoming key Consumer Price Index (CPI) data.
US inflation likely accelerated in April following a March slowdown, as higher tariffs on Chinese goods began pushing up prices. According to Bloomberg’s median economist forecast, the Consumer Price Index (CPI) rose 0.3% month-over-month.
On Tuesday, the dollar gained significant strength after China and the US agreed to a 90-day rollback of import tariffs they had imposed on each other. According to Reuters, the news triggered a relief rally in the markets.
An increase of the indicator value may contribute to the rise in quotes of USD.
On Monday, May 12, the United States and China announced an agreement to temporarily reduce mutual tariffs. The world's two largest economies are seeking to end a trade confrontation that has weighed on global economic prospects and put financial markets under severe pressure.
American stocks and the dollar rallied after China and the US reported major breakthroughs in two-day talks over the weekend aimed at easing trade tensions between the two countries.
Federal Reserve Governor Michael Barr and New York Fed President John Williams both warned late last week that Trump's policies are negatively impacting the nation's economy. More US officials stated this point recently, Yahoo Finance reports.
The dollar is the monetary unit of the United States (US). It is also used as the official currency by some other countries (Ecuador, Zimbabwe, El Salvador). The dollar holds a leading position in the world economy.
At the moment, the dollar dominates the system of international settlements with almost 50% share (the euro ranks second with less than 25%). Meanwhile, the dollar's dominance is even more pronounced in the financial sector, on the foreign exchange market, and in the government reserves.
The US currency (USD) quotes, as well as those of its foreign counterparts, depend primarily on the economic and political situation in the issuing country. The US authorities, such as the Federal Reserve System (the Fed) and the Department of the Treasury, influence the dollar exchange rate by changing their monetary, fiscal, budget, and tax policies.
Moreover, the value of the dollar may be significantly affected by the latest news and the international situation. Global economic problems and rising geopolitical tensions have historically been favorable for the US currency, as investors consider it one of the major safe-haven assets, along with gold. In contrast, during periods of strong economic growth and a relatively calm global environment, the demand for the dollar tend to reduce.