In stark contrast to Donald Trump’s first administration, recent comments by a number of key US officials suggested that Trump 2.0 would be laser-focused on (lowering) UST yields rather than (boosting) stock market returns. This is significant given the administration’s plan to notably boost fiscal spending by USD4-5trn as part of the 2026 budget. This could mean that Trump 2.0 would: (1) prioritise cutting fiscal spending at home and abroad even if it hurts US growth; (2) boost global energy supply to lower energy inflation by seeking deals with Russia and Iran even if it means antagonising Western allies; (3) boost fiscal revenues via tariffs but do so selectively (eg, targeting China) and favour a strong USD, given the threat of inflation and a global trade war; and (4) seek to exert pressure on the Fed to ease policy through rate cuts and an end to QT to keep a lid on US borrowing costs.
While recent US growth data has been disappointing, and US tariff headlines no longer seem to fuel risk aversion and support the USD, we continue to believe that tariffs remain a key FX market theme and further think that market concerns about the outlook of the US economy are overblown. We also think that many Fed-related negatives are in the price of the USD and expect that the CPI data (due on Wednesday) could encourage investors to reassess their overly dovish FOMC policy rate outlook. Ahead of that, on the day, focus will be on the JOLTS data for January. Also today, FX investors would be on the lookout for any details about the steel and aluminium tariffs that President Donald Trump threatened to start levying from tomorrow, 12 March. With market tariff angst potentially returning and in the absence of any significant US data disappointments today, the USD could consolidate.
While recent US growth data has been disappointing, and US tariff headlines no longer seem to fuel risk aversion and support the USD, we continue to believe that tariffs remain a key FX market theme and further think that market concerns about the outlook of the US economy are overblown. We also think that many Fed-related negatives are in the price of the USD and expect that the CPI data (due on Wednesday) could encourage investors to reassess their overly dovish FOMC policy rate outlook. Ahead of that, on the day, focus will be on the JOLTS data for January. Also today, FX investors would be on the lookout for any details about the steel and aluminium tariffs that President Donald Trump threatened to start levying from tomorrow, 12 March. With market tariff angst potentially returning and in the absence of any significant US data disappointments today, the USD could consolidate.
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1. AccuTrade System:
tradingview.com/v/yDFPnb1J/
2. Signal Performance:
thedailyfx.com/performance/
3. We provide Free TradingView Premium and Essential Membership.
tradingview.com/v/yDFPnb1J/
2. Signal Performance:
thedailyfx.com/performance/
3. We provide Free TradingView Premium and Essential Membership.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.