The US Dollar Index (DXY) failed to maintain its early strength on Wednesday (4/23) and now hovers near the 99.50 region, reflecting continued uncertainty over US trade policy and weakening business momentum. The greenback's intraday surge towards the 100.00 mark during Asian trade faded quickly after comments from Treasury Secretary Scott Bessent and fresh scrutiny of President Donald Trump's policy stance. Additionally, the Federal Reserve's Beige Book pointed to worsening economic conditions.

On the economic front, the S&P Global Composite Flash PMI for April fell to 51.2 from 53.5, indicating slower overall business activity. While the Manufacturing PMI edged up to 50.7, the Services PMI fell to 51.4 from 54.4 — highlighting sluggish demand in the services sector. Chris Williamson of S&P Global noted that growth momentum is clearly weakening, while inflationary pressures remain, posing a challenge to the Federal Reserve's (Fed) balancing act.

Daily Market Movers Roundup: US Dollar Weakens After PMI Data, Tariff Noise, Fed Beige Book

Bessent reiterated that tariff negotiations are not imminent and will occur below Trump-Xi levels, adding to uncertainty.

Despite a modest increase in factory output, weakness in the services sector dragged the Composite PMI lower to 51.2.

Analysts at Standard Chartered warned that tariff revenues would fall short of funding the proposed tax cuts, potentially adding pressure on US interest rates.

President Trump's mixed messages on tariffs — initially conciliatory before turning ambiguous — have confused traders and investors.

Wall Street's S&P 500 gave up gains after Bessent's remarks, while the USD pared losses with the DXY steady around 99.50. Speaking on Wednesday, Bessent clarified that President Trump had not offered to unilaterally cut tariffs on Chinese imports.

However, he stated that neither side views the current tariff levels as viable in the long term, hinting at the potential for mutual reductions.

Meanwhile, Trump has said he would be "nice" to China if talks resume, offering lower tariffs as an incentive. However, the lack of a clear timeframe for negotiations has unnerved markets.

The Federal Reserve's April Beige Book indicated that overall economic activity remained largely unchanged. However, tariff concerns have deepened the economic outlook in many regions. Consumer spending has shown mixed results, and the labor market appears to be easing, with many districts reporting flat or slightly declining employment levels.

Wage growth has slowed in certain regions, although labor availability has improved. On the inflation front, businesses are experiencing higher input costs driven by tariffs, often passing these costs on to consumers as profit margins shrink. The report also noted that companies are bracing for increased uncertainty, particularly due to the impact of tariffs and slowing demand for services. (Newsmaker23)

Source: FXstreet