US Dollar Stays on a Tightrope: Trade Tension & BoJ Pressure
The greenback is flapping in a narrow band as traders hold their breath for clearer signals from the White House. With a wavering stance on tariff hikes, the market feels a bit like a kid waiting to see if the next step will be a slap on the wrist or a full-on “fiscal monkey bars.”
Trade Policy Teasers
- Canada & Mexico: Threats loomed for a 25% tariff, but the knob hasn’t been turned yet.
- China: A quiet hint yesterday that a 10% tariff might be on the cards this time.
- Even with the chatter of inflation‑driven pressure, the lack of concrete action has the crowd guessing whether the administration is playing it safe or nudging to a “slow‑burn” style.
BoJ’s Rate Row
- Upcoming Bank of Japan decision could tip the scales.
- If the BoJ lifts rates, the Yen might gain a little muscle and the dollar could take a step back.
- Conversely, a “keep‑steady” verdict would let the dollar lean forward, adding a little bite to its already sturdy position.
Yield Stability & Fed Watch
- Treasury yields held steady: the 10‑year note hovered between 4.6% and 4.5%.
- Investors are playing cautious, keeping an eye on the Federal Reserve’s upcoming rate decision that could shift the dollar’s trajectory.
- If the Fed adopts a hawkish stance while trade policy remains tight, both US yields and the d‑bar could see a boost.
Bottom line: The dollar is in a holding pattern, trading close to a sweet spot. All that matters is whether the policy punch and the BoJ’s wiggle‑wiggle decides to give the greenback an extra kick or keep it snug on the sidelines.
