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USD Slides on Korea Summit Plans; Trump Facing Pressure on Proposed Tariffs
Published March 6, 2018
The greenback fell against a basket of majors today, following reports that North and South Korea have agreed to hold a summit next month, in a sign of easing tensions on the peninsula. North Korea also indicated that it could be willing to dispose of its nuclear technology and agreed to suspend all weapons testing during the summit in April.
US President Donald Trump faced growing pressure yesterday from political and diplomatic allies as well as US companies urging him to pull back from proposed steel and aluminum tariffs. Trump tweeted that he would rethink duties on steel and aluminum if a new “fair” NAFTA agreement were signed, adding to the uncertainty of this issue.
Themes of US protectionism and possible trade wars continue to weigh heavily on the Canadian dollar. The loonie has slid more than 3% against the US dollar since January. Although the loonie has recovered slightly this morning (USD/CAD down ~0.60% at time of writing), it has posted by far the worst performance among the G10 currencies against the greenback.
Markets will be paying close attention to comments from a trio of Federal Reserve speakers today for their views on the recent uptick in inflation and how that can affect monetary policy. New York Fed President William Dudley kicked things off this morning at 7:30am EST, when he gave a speech on economic conditions and recovery efforts in the US Virgin Islands. Fed Governor Lael Brainard will speak on the economy and monetary policy at the Money Marketeers Forum in New York at 7pm EST. Dallas Fed President Rob Kaplan will take part in a moderated discussion at CERAWeek, an annual energy conference, in Houston at 8:30pm EST.
The American Petroleum Institute is due to release its weekly report at 4:30pm EST, amid forecasts for an oil-stock gain of around 3.0 million barrels. Both benchmarks hit their highest level in about a week yesterday, amid growing optimism that re-balancing in crude markets is well underway thanks to OPEC-led production cuts. Brent crude is up ~0.47% while WTI crude is up ~0.53% on the day, trading at $65.80 and $63.05/barrel, respectively.