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1 month ago | 
hedgethink.com | Chris Butler
President Trump’s surprise threat of a 50% tariff on EU imports reignited trade war fears just as investors were adjusting to Moody’s downgrade of US sovereign debt. The one-two punch hit sentiment hard, reversing equity gains and pressuring the Dollar. The US Dollar, already under scrutiny due to growing debt concerns, gave back most of its month-long rally.
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1 month ago | 
hedgethink.com | Chris Butler
However, the relief was short-lived, as Moody’s downgrade of US sovereign credit late in the week shook sentiment and raised fresh concerns over the country’s fiscal path. The US Dollar posted its fourth consecutive weekly gain, with the DXY rising 0.5% to close at 100.976, supported by easing trade tensions but limited by lingering concerns over the US economic outlook. Momentum remains tepid, with the greenback gaining on relative strength more than domestic conviction.
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1 month ago | 
hedgethink.com | Chris Butler
While the Fed held rates steady and the BoE delivered a rate cut, the monetary policy moves were largely overshadowed by the trade breakthrough. Despite the historic nature of the deal, market reaction was muted, as investors digested the detail and weighed its real-world impact. Sterling and the US Dollar emerged as the top performers, benefiting from trade optimism and political clarity.
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1 month ago | 
hedgethink.com | Chris Butler
The catalyst was a better-than-expected US non-farm payrolls report, which reassured investors that the initial economic impact from tariffs may be less damaging than feared. Markets also took comfort in signs of renewed momentum in trade negotiations, including a potential thaw between the US and China. US stocks have now erased their April losses, with the S&P 500 marking a nine-day winning streak, its longest since 2004.
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1 month ago | 
hedgethink.com | Chris Butler
While no breakthroughs were confirmed in US-China talks, positive signals from other trade negotiations—notably with Japan, South Korea, India, and even Switzerland—helped bolster optimism. President Trump hinted that “many” trade deals could fall into place within a month, adding fuel to the recovery narrative. Despite the rebound in risk assets, US assets continue to show signs of hesitation.
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2 months ago | 
hedgethink.com | Chris Butler
However, under the surface, risks remain elevated as Trump-led trade headlines continue to loom large over sentiment. While there was no major escalation, the threat of retaliatory action and tariff surprises kept traders cautious. The US Dollar attempted to stabilize after weeks of weakness, with the DXY index retreating 0.6% to close at 99.229, a critical support area that traders are closely watching.
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2 months ago | 
hedgethink.com | Chris Butler
The White House’s shifting stance on trade policy left investors bewildered, with even administration insiders seemingly struggling to keep up. The result? Sharp moves across FX, bonds, and equities – and a clear message that confidence in US economic leadership is waning. The Dollar was the week’s biggest loser, despite rising yields and occasional risk-off stretches. The DXY index dropped 3% to close at 99.783, testing key support before bouncing slightly into the weekend.
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2 months ago | 
hedgethink.com | Chris Butler
The impact was immediate and severe: equities plunged, Treasury yields fell, and volatility surged. China’s swift retaliation added fuel to the fire, escalating rhetoric and raising fears that a full-scale global trade war is now underway. The tone has shifted from cautious optimism to outright concern. The DXY index dropped 1.1% to 102.892, reflecting both the market’s view that the US may suffer economically and a renewed appetite for diversification away from the Dollar.
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2 months ago | 
hedgethink.com | Chris Butler
By Friday, the cracks were clear: equities sold off, yields fell, and Gold surged to fresh record highs. The flight to safety is now well underway, and markets are no longer willing to wait for clarity. While FX markets remained largely contained within prior-week ranges, sentiment clearly deteriorated. The US Dollar moved broadly sideways, with marginal changes despite slightly better-than-expected GDP and Core PCE data. The DXY closed at 104.011, just below the previous week’s level.
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Mar 27, 2025 | 
hedgethink.com | Chris Butler
With key drivers such as Fed policy and tariff threats entering a period of wait-and-see, currency markets slipped into consolidation mode, mirroring the broader indecisiveness seen across asset classes. In the US, the Federal Reserve held rates steady, as expected, and reduced the pace of quantitative tightening – arguably the clearest signal yet that QT is nearing its end. The central bank also maintained its projection for two rate cuts later this year.
