Smoke ‘Em If You Got ‘Em – Currency Thoughts
Smoke ‘Em If You Got ‘Em
February 4, 2025
Trade warriors took a step back from the brink late yesterday. President Trump temporarily halted plans to impose 25% tariffs against Canada and Mexico, claiming negotiating progress in efforts to stop border crossings into the U.S. from those countries of Fentanyl and undocumented immigrants. In turn Canadian PM Trudeau halted its planned retaliatory levy of 25%. Meanwhile, a 10% U.S. tariff against China did go into effect today and elicited China’s counter-punch of an additional 10% levy on imports of U.S. energy, farm equipment, and motor vehicles. Xi and Trump plan a phone conversation soon to see if a deal can be made.
There’s no way to know how long this breather will last. If geopolitics in the Middle East over the past year taught investors anything, breaks in the roller-coaster are more likely to end sooner than later. Data releases planned for today have been unusually sparse, but the flow of potential market-moving reports resumes tomorrow, led by a slew of service-sector purchasing manager surveys and winding up with the U.S. Labor Dept’s January employment situation data.
Later this morning, a trio of monthly U.S. data get reported: the JOLTS figures on job quits and hires, the RCM/TIPP optimism index, and monthly factory orders.
Ireland’s manufacturing purchasing managers index rebounded 1.2 points in January to a 3-month high of 51.3. Non-oil PMI surveys for Egypt and Saudi Arabia released this Tuesday each showed improvement. Saudi Arabia’s index jumped 2.1 points to a 125-month high of 60.5 and was not far from that prior record of 61.8. Egypt’s PMI of 50.7 in January was 2.5 points above the December reading and at a 50-month high despite weaker sentiment about the future.
The Central Bank of Armenia’s policy interest rate was cut today by 25 basis points to a 3-1/2-year low of 6.75%. From a peak of 10.5% maintained from December 2022 until June 2023, the Armenian refinancing rate had been cut without interruption by 150 basis points in what remained of 2023 and a further 225 bps last year. Although Armenian consumer price inflation rose to a 20-month high in December, such remained well below the central bank’s target of 4%. After cresting at 10.3% in mid-2022, CPI inflation dropped as low as 1.7% in February 2024 and was only at 1.5% last month.
As investors took a breather, the dollar settled back overnight by 1.0% against the Canadian currency, 0.4% versus the Aussie dollar, 0.3% relative to the euro and Swissy, and 0.1% vis-a-vis the Chinese yuan and sterling, but it also climbed 0.4% against the Japanese yen.
Bitcoin remained in retreat mode, sliding 2.1% and below the $100k level. Oil and gold prices are down 1.8% and 0.5%. Ten-year sovereign debt yields moved back up by six basis points in the U.K., 3 bps in Japan, Germany and Spain, and 2 basis points in the United States, Italy, France and Switzerland.
Asian stock markets recovered 2.8% in Hong Kong, 1.8% in India, and 0.7% in Japan, but there’s been scant net movement in most major European stock indices, nor in pre-open U.S. equity futures.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Bank of Armenia, trade war
ShareThisYou can leave a response, or trackback from your own site.
