The dollar has fallen further, hitting the lowest level since November, after Donald Trump said his new tariffs would cause “a little disturbance”, in a combative speech to Congress, as he vowed to push ahead with his hugely divisive domestic agenda.
In the first major policy speech since he took office in late January, the US president doubled down on his decision to impose 25% tariffs on Canada and Mexico, the US’s two biggest trading partners, and an additional 10% levy on China. Trump said: "Tariffs are about making America rich again, and making America great again.
"It’s happening, and it will happen rather quickly."
China and Canada said they would hit back with retaliatory tariffs.
However, Trump’s trade polices have sparked “Trumpcession fears” – concerns that they could push the American economy into a contraction or even recession – and there is talk that the dollar could lose its safe-haven status.
A closely watched gauge of the US economy weakened a couple of days ago. The Atlanta Federal Reserve’s GDPNow model now estimates that US GDP will shrink at an annualised rate of 2.8% in January-March.
The dollar index, which measures the greenback against a basket of major currencies, fell to 105.35 this morning, the lowest since 11 November.
European shares are rallying, as expected, after the German debt brake deal was announced.
The Dax in Frankfurt jumped by 2.2%, while France’s Cac and Spain’s Ibex rose by 1.4% and the UK’s FTSE 100 advanced by 0.57%, or 50 points, to 8,808.
The partners in Germany’s next government have said they will seek to loosen rules on running up debt to allow for higher defence spending.
Economists at Deutsche Bank called it a “a historic ‘whatever it takes’ moment”.
The leaders of CDU/CSU and SPD (which are in talks to form a coalition government after a national election just over a week ago) agreed on an even more significant fiscal expansion than expected.
The plan is to make three big changes to the debt brake (which limits new borrowing to 0.35% of GDP) in the very near term.
A €500bn special purpose vehicle for infrastructure investment, of which €100bn will be allocated to the federal states, called Länder.
A reform of the debt brake to exempt any defence spending over and above 1% of GDP, effectively permitting open-ended borrowing for defence.
A reform of the debt brake at the Länder level to raise their net borrowing cap from 0% to 0.35% of GDP, as at the federal level. The agenda • 9am GMT: eurozone HCOB Services and composite PMIs for February (final) • 9.30am GMT: S&P Global Services and composite PMIs for February (final) • 2.30pm GMT: the Bank of England governor, Andrew Bailey, and other policymakers are quizzed by Treasury committee about interest rates • 3pm GMT: US ISM Services PMI We'll be tracking all the main events throughout the day …
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It ditched its ridiculous name, and Aberdeen’s numbers are starting to look better too 
