Select Language

Consequences for the USD exchange rates are reversed - Commerzbank

Breaking news

Consequences for the USD exchange rates are reversed - Commerzbank

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.04.07 20:19
Consequences for the USD exchange rates are reversed - Commerzbank

update 2025.04.07 20:19

A reasonably normal tariff policy would cause the dollar to appreciate. Why? Because US consumers would prefer to consume US goods instead of imported goods, and US companies would prefer to install US machinery. After all, no tariffs would have to be paid on that. This means that demand for US goods would increase, as would their price relative to foreign goods, Commerzbank's Head of FX and Commodity Research Ulrich Leuchtmann notes.

Tariffs don't seem to strengthen the USD

"This can happen in two ways: larger numbers on price tags in the US (i.e. US inflation) or a stronger US dollar. The US Federal Reserve would have the choice between the two alternatives because it is the Fed that controls price developments. And because the Fed is generally assumed to want to keep inflation at 2%, the logical conclusion from the market's perspective was that the US tariff policy would strengthen the USD."

"But it gets worse. These sudden interest-rate cut expectations don't just appear out of thin air. They reflect the anticipation of a massive negative real economic shock as a result of US tariff policy. I suspect that most market participants expect the US economy to slide into a recession as a result of the tariffs."

"The economic 'story' that the market is telling us with these two-track inflation expectations is that a recession or recession-like conditions will cause US demand to slump to such an extent that the initial increase in costs resulting from tariffs will be more than offset in the medium term. If that were to happen, the tariffs' medium-term price effect would evaporate - along with any reason for a stronger US dollar."



Date

Created

 : 2025.04.07

Update

Last updated

 : 2025.04.07

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

Gold price slides back closer to $3,300 amid tariff deals optimism

Gold price (XAU/USD) struggles to capitalize on the previous day's bounce from the vicinity of the $3,265-3,260 pivotal support and attracts fresh sellers during the Asian session on Tuesday.
New
update2025.04.29 13:21

Silver Price Forecast: XAG/USD holds losses near $33.00 as demand for metals weakens

Silver price (XAG/USD) is depreciating after registering gains in the previous day, trading around $33.00 per troy ounce during the Asian hours on Tuesday. The safe-haven demand for precious metals, including Silver, continues to weaken as trade-war concerns ease.
New
update2025.04.29 13:11

NZD/USD falls to near 0.5950 due to shifting US-China trade signals

NZD/USD is retracing its recent gains from the previous session, trading around 0.5960 during the Asian hours on Tuesday. The US Dollar (USD) is finding support as optimism grows over easing US-China trade tensions.
New
update2025.04.29 12:34

WTI struggles near $61.75 area, over one-week low amid demand concerns

West Texas Intermediate (WTI) US Crude Oil prices struggle for a firm intraday direction during the Asian session on Tuesday and oscillate in a narrow band around the $61.75 area, just above a one-and-half-week low touched the previous day.
New
update2025.04.29 11:56

USD/INR softens on steady FII inflows, positive US-India trade talks

The Indian Rupee (INR) extends its upside on Tuesday after logging its best day in more than two weeks in the previous session. The positive developments surrounding US-India trade talks provide some support to the local currency.
New
update2025.04.29 11:54

USD/CAD depreciates to near 1.3800 as Canadian Dollar gains on early election outcome

The USD/CAD pair remains under pressure for the second straight session, hovering around 1.3820 during Asian trading hours on Tuesday. The pair weakens as the Canadian Dollar (CAD) gains modestly, supported by early election results in Canada.
New
update2025.04.29 11:43

Canadian Liberal Party wins the 2025 federal election - CBC News

As polls closed in Canada, early results showed that the ruling Liberal Party won the federal election, according to CBC News.
New
update2025.04.29 11:24

Japanese Yen trades with mild negative bias amid receding safe-haven demand

The Japanese Yen (JPY) ticks lower during the Asian session on Tuesday and erodes a part of the previous day's strong recovery gains from a two-week low against its American counterpart.
New
update2025.04.29 11:22

Australian Dollar edges lower as US Dollar appreciates due to easing global trade tensions

The Australian Dollar (AUD) is edging lower on Tuesday after registering more than 0.50% gains against the US Dollar (USD) in the previous session. The AUD/USD pair depreciates as the US Dollar appreciates amid easing global trade tensions.
New
update2025.04.29 10:46

GBP/USD declines below 1.3450 ahead of BoE's Ramsden speech

The GBP/USD pair attracts some sellers to near 1.3425 during the early Asian trading hours on Tuesday, pressured by a modest rebound of US Dollar (USD). Investors await a speech by Bank of England (BoE) official Dave Ramsden for fresh impetus.
New
update2025.04.29 10:22

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel