Market Highlight 09.01.2025

Minutes from the Federal Reserve’s December 17 - 18 meeting, released last night, reveal mounting concerns over stronger price pressures in 2025, driven by the likelihood that President-elect Donald Trump will increase tariffs on imported goods. A “majority” of the 19 participants supported a further 0,25% rate cut, while opting to hold rates steady in the subsequent period was deemed the safer choice, given the potentially substantial changes ahead in U.S trade and immigration policies. The FED’s latest projections, published after the December meeting, indicate 2 additional rate cuts in 2025 - down from 4 forecasted in September. Meanwhile, market expectations suggest policy rates may remain unchanged until May or June this year. Federal Reserve Governor Christopher Waller noted last night that the Central Bank may cut rates further this year, albeit over a longer timeline, given his expectation that inflation will soon resume a downward path toward the FED’s 2% target.

The USD Index climbed for a second straight day (+0,28%) yesterday, fueled by rising U.S Treasury yields. This came on the heels of a report suggesting that President-elect Donald Trump is contemplating emergency measures to introduce a new tariff program. The dollar remained firm even as the U.S private-sector ADP jobs report fell short of prior forecasts. Domestically, the USD/VND interbank exchange rate traded mainly in the 25.350 - 25.400 range throughout yesterday. With barely 10 days left before the new U.S administration takes office - promising potentially significant shifts in policy - upward pressure on the exchange rate could soon resume.

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