Markets are still largely more optimistic following Trump’s remarks on trade
The dollar is holding firmer across the board following Trump’s more optimistic take on trade relations with China earlier in the European morning. Although the greenback has pared its advance against the aussie, it has notably gained against the euro, pound and yen.
EUR/USD is now trading near the lows for the day at around 1.1117 with the euro also finding little comfort from the latest German Ifo survey report moments ago.
Although the dollar is traditionally seen as a haven currency, one of the key factors affecting the currency now is Fed pricing.
Earlier in the day, Fed fund futures saw ~29% odds of the Fed cutting rates by 50 bps in September. After Trump’s remarks, those odds have been slashed to just ~15% now.
As such, that is helping to put a bid back in the dollar. Looking ahead, be wary of potential trade developments as it will continue to play a part in influencing Fed expectations ahead of the September FOMC meeting.