Tariff speculation rocks USD as macro data signals 'US economic exceptionalism' in 2025

Matthew Ryan, CFA Ebury

We’re only a little over a week into 2025, and we’ve already seen no shortage of volatility in the dollar. Tariff speculation has dominated the narrative, but ultimately we won’t known the full details of these import taxes for a little while yet, at least until after Trump’s inauguration on 20th January.

Speculation will persist, however, and that opens the door to some wild moves in both directions. Tariff news aside, macroeconomic data out of the US remains bullish for the dollar. Tuesday’s impressive PMI figures from ISM should support calls for a ‘soft landing’ and another period of US economic exceptionalism in 2025.

There remains no signs whatsoever of recession and instead of slowing down, business activity actually accelerated at the end of last year (54.1 vs. 52.1), well above the 53.3 consensus. The dollar rallied on the news and US Treasury yields leapt towards 4.7% - the highest level since May.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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