The US dollar traded unevenly as markets assessed rising oil prices, a firmer Japanese yen and heightened US trade frictions, alongside softer equities and higher US yields with a slightly steeper Treasury curve. Brent was described as nearing $100 after attacks on Saudi oil infrastructure. In rates, swaps continued to imply around a 60% probability of a 25 bps move at the September meeting, while attention turned to US inflation releases for guidance on the near-term policy path.
Escalating Trade Tensions
Trade risks intensified after President Trump criticised Canada online in response to Ottawa’s counter-tariffs, and he also linked the prospect of a broader trade conflict to the Federal Reserve’s interest-rate stance.
Upcoming US Economic Data
The calendar focus was on US PPI due Thursday and CPI due Friday, seen as key inputs ahead of the September 16 decision, with the Fed entering an FOMC blackout period. The piece also stated that the content was produced with the help of an AI tool and reviewed by an editor.
