Bessent: I’m not sure why the US dollar moves would bother me

Bessent indicates that the US dollar drop this year is normal variance.

• The US still has a strong dollar policy
• Currencies move up and down
• More fiscal spending in Europe tells you that the euro should appreciate
• I don’t think anyone is necessarily talking about a shadow Fed
• One spot on the Fed will open up early in the year when Kugler leaves
• A group of trade deals (10-12) will be wrapped up by then
• Approx 20 other nations will either see reciprocal rates kick in, or will see 10% baseline if they’re negotiating in good faith
• It’s all up to Trump
• My inclination is that USTR will start a 301 investigation into Canada’s digital services tax

On Canada digital services tax:

• “We knew it was coming, we hoped they wouldn’t do it”
• “We were hoping as a sign of goodwill that the new Carney administration would at least put a brake on that during the trade talks.”

Ah yes, because the US has halted its tariffs during trade talks.

This article was written by Adam Button at www.forexlive.com.