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On a year-over-year basis, CPI is projected to fall to 2.5% from 2.8%. Weekly unemployment claims are also expected to tick higher to 223,000, compared to 219,000 previously.
Tariff Pause Adds to Dollar Weakness
Adding to pressure on the greenback is President Trump’s recent announcement of a 90-day pause on new tariffs, reducing duties to 10% for most U.S. trade partners.
The move, intended to open the door for renewed trade negotiations, has momentarily eased global tensions. However, it has also raised concerns over U.S. economic resilience.
Mark Hackett, Chief of Investment Research at Nationwide, called the pause “a stabilizing gesture,” but warned that the underlying trade dispute remains unresolved.
Fed Balances Inflation and Slowing Growth
Meanwhile, the Federal Reserve faces mounting pressure as it balances persistent inflation with signs of slowing growth. According to minutes from the most recent FOMC meeting, policymakers acknowledged the “difficult tradeoffs” involved in pursuing stable prices while supporting economic momentum. Despite some softening in economic indicators, Fed officials have reiterated a data-dependent stance and downplayed the immediate impact of tariff dynamics.
Rate cut expectations have moderated in response. The CME FedWatch Tool now shows just a 40% probability of a cut at the Fed’s next meeting, a sharp decline from above 60% just weeks ago.
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