Currency markets experienced some volatility over the past week, driven once again by President Trump’s comments in relation to US trade tariffs.
While further promises of tariffs on the EU has negatively impacted the euro in recent days, the currency had recovered some ground against the dollar of late.
This week’s Conference Board measure of US consumer confidence was the latest such data point, with the monthly decline in the index the largest since August 2021 as some respondents cited trade and tariffs as factors for the fall in confidence in February.
While bond and swap markets are reflecting potentially weaker US growth and more rapid cuts by the Fed, there also remains a stagflationary risk, particularly if President Trump follows through on the promised tariffs.
