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The Dollar’s slide into the abyss finally stalled yesterday after three consecutive days of harrowing losses. The DXY is down over 3% since the start of this week, mostly driven by tariff uncertainty and a loss of confidence in the US economy. Wednesday’s ADP employment report did nothing to restore confidence in the US labour market, indicating just 77k new jobs instead of the predicted figure of 140k. The ADP numbers are a precursor to Non-Farm Payrolls later today, which are predicted to announce 160k new jobs and a 4% unemployment rate in February. Whether or not the selloff in the Greenback will continue will at least partially depend on how far the actual figures diverge from expectations.
In a strongly telegraphed move, the ECB lowered deposit rates on the Euro from 2.75% to 2.5% yesterday. More interestingly, the central bank made it clear that monetary policy would become “meaningfully less restrictive” in the future. Growth in the Eurozone has been lacklustre to put it mildly, but recently European governments are facing the added pressure of a sustained selloff in bond markets, meaning it is becoming more expensive for states to borrow money. Yields on the German 10-year bond in particular spiked 30-bps on Wednesday, the sharpest daily jump since 1990. The back and forth with regards to tariffs has injected fear into bond markets around the world, extending all the way to Japan, which is seeing some of the highest yields in over 15 years.
The financial landscape is mired in uncertainty. For all the question marks surrounding future trade tariffs, they pale in comparison to those relating to cryptocurrencies. The new administration is evidently more supportive of the industry than its predecessor was, but the lack of concrete details is beginning to fatigue some investors. Crypto traders probably have whiplash from this week’s erratic price action, in which Bitcoin seesawed between $95k and $81k with very little explanation as to why. Talks of a strategic crypto reserve are dominating the newswires but once again, nothing has been clearly delineated as of yet.
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