Dollar surges after Powell signals no imminent rate cut
The dollar surged as traders digested Federal Reserve chair Jay Powell’s apparent reluctance to cut rates in the near future.
The US dollar index — which tracks the currency against a basket of six international peers, and moves with interest rate expectations — rose 1.1 per cent on Wednesday afternoon to its highest level since May.
The move put the dollar on track for its best week since September 2022.
The S&P 500 closed 0.1 per cent lower on Wednesday, giving up earlier gains.
Donald Trump announces 15% tariff on South Korea
Donald Trump announced a 15 per cent tariff on South Korean exports to the US as part of a “Full and Complete Trade Deal” on Wednesday evening, marking an agreement with one of America’s largest trading partners days before an August 1 deadline.
In a post on Truth Social, Trump said the US would charge a 15 per cent tariff on South Korean goods in exchange for the Asian nation investing hundreds of billions of dollars in the US and purchasing $100bn in liquefied natural gas or “other energy products”.
Trump said South Korea would “give to the United States $350 Billion Dollars for Investments owned and controlled by the United States”, adding that he would select the investments himself. He also said that the US’s sixth-largest trading partner would invest a “large sum of money for their Investment purposes”, the total of which would be announced in the next two weeks.
Powell says dissenters provided ‘clear explanation’ of their views
Jay Powell said the Fed governors who dissented from the decision to hold interest rates steady had provided a “clear explanation” of their views as he played down a schism on the central bank’s rate setting committee.
“On the dissents, what you want from everybody — and also from a dissenter — is a clear explanation of what your thinking is,” the Fed chair said. “And we had that today.”
Two governors — Chris Waller and Michelle Bowman — voted for a 25 basis point cut, the first time multiple governors have broken with the majority on a rate decision since 1993.
“The majority of the committee was of the view that inflation is a bit above target, maximum employment is at target,” Powell said. “That calls for a modestly restrictive . . . stance on policy for now.”