USD: Trade risks and Fed signals weigh – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad notes the Dollar is slightly firmer, mainly due to Japanese Yen weakness, with US equities stabilizing after an AI-driven selloff. The bank highlights potential risk sentiment drag from new US global tariffs and possible trade frictions, while Fed Governor Waller’s comments and upcoming ADP and confidence data shape expectations for the next FOMC decision.

Tariffs, Fed rhetoric and data focus

"USD is a little firmer, largely reflecting broad JPY weakness. S&P 500 futures point to a steadier open after the benchmark fell 1% yesterday driven by the so-called AI scare trade. In parallel, the US Supreme Court’s tariff ruling could stoke trade friction, posing a drag on broader risk sentiment."

"Fed Governor Christopher Waller sees even odds of a 25bps cut at the next March 17-18 FOMC meeting. Waller said “if the good labor market news of January is revised away or evaporates in February, it would support my position at the FOMC's last meeting, that a 25-basis-point reduction in the policy rate was appropriate, and that such a cut should be made at the March meeting.” Fed funds futures price-in nearly zero chance of a cut in March."

"ADP private employment change for the four weeks to February 7 is up next (1:15pm London, 8:15am New York). The last report showed that for the four weeks ending January 31 private employers added an average of 10.25k jobs a week. On a side note, the January ADP jobs print was up 22k while non-farm private sector payroll (NFP) growth was much stronger at 172k."

"The February Conference Board Consumer Confidence index is the other data highlight (3:00pm London, 10:00am New York). Consumer confidence is seen recovering to 87.1 after falling to 84.5 in January, the lowest level in more than a decade. Pay attention to consumer’s views of the labor market, which worsened in January."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)