US equity markets and the US Dollar rebounded sharply overnight. The US Treasury Secretary, Scott Bessent, commented on the tumultuous trade war between China and the USA and said he thought that this would de-escalate soon. The IMF is meeting in Washington this week and the global trade wars appear to be dominating the conversations. Inflation appears to have become yesterday’s news, although the US Fed was also a hot topic. Trump has decided to exert control over interest rates and the Federal Reserve. He confirmed his low opinion of the Fed Chairman Powell, titling him ‘Mr Too Late’ and threatened him with dismissal. The US Dollar recovered some lost ground, with the EUR falling back to 1.1430, while the GBP drifted to 1.3340.Commodity currencies also suffered the rising reserve, with the NZD surrendering 0.6000, while the AUD fell back below 0.6400. All eyes remain focused on the Sino-US trade wars, with capital flows also being curtailed. Behind the scenes there is communications going on, so progress will be made, but this is as much about ‘face’ as reality and economics.
