**ASX Set to Climb as Wall Street Edges Higher Despite Trump-Fed Tensions**
Original reporting by William McInnes, The Australian Financial Review
**Overview**
Australian shares are expected to open higher following a positive session on Wall Street, where US equities edged up amid heightened public disputes between President Donald Trump and the US Federal Reserve over monetary policy. Persistent volatility in global markets remains as investors digest trade tensions, central bank policy decisions, and geopolitical risks. This article examines recent movements in the equity and forex markets, factors influencing investor sentiment, and what lies ahead for both Australian and global markets.
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**Wall Street Rally Tempers Uncertainty**
US equity markets closed modestly higher, buoyed by investor optimism that central banks will continue supporting growth.
– The S&P 500 rose by 0.1 percent
– The Dow Jones Industrial Average advanced 0.2 percent
– The Nasdaq Composite rose 0.2 percent
Trading volumes were lower than average as market participants assessed the ongoing trade dispute between the US and China and the potential for further monetary policy easing from central banks globally.
**Key Drivers of Wall Street Movements:**
– Expectations the Federal Reserve will lower interest rates to shield the US economy from trade-related slowdown
– Mixed economic data highlighting underlying resilience in the US economy
– Earnings reports from retailers and technology firms exceeding market expectations
– Ongoing uncertainty surrounding the US-China trade conflict
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**President Trump vs. the Federal Reserve**
President Donald Trump continued his public criticism of the US Federal Reserve, accusing the central bank of undermining his administration’s economic agenda by keeping interest rates too high. Trump has repeatedly called for more aggressive rate cuts to boost growth and maintain US competitiveness against countries where monetary policy is looser.
– Trump argues that higher rates are driving up the US dollar and hurting US exporters
– He has specifically called out Fed Chair Jerome Powell, suggesting that the Fed should “lower rates fast”
– The Federal Reserve thus far has signaled a cautious approach, citing data dependency and inflation targets
Market participants are now focused on upcoming comments from Fed officials for clues on whether further rate cuts will materialize.
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**Forex Market Reaction:**
In currency markets, the US dollar wavered as traders weighed the likelihood of additional Fed easing.
– The US dollar index slipped modestly as investors anticipated lower US rates
– The Australian dollar traded higher against the greenback, reflecting the global appetite for risk assets and a slight reprieve in trade tensions
– Major global currencies including the yen and the euro remained within recent trading ranges, as investors sought clarity on central bank policy paths
Currency strategists remain cautious, noting:
– Prolonged trade war risk could see continued safe-haven flows into the US dollar and Japanese yen
– The Australian dollar is likely to be sensitive to any headline changes regarding China-US trade negotiations and domestic economic data
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**Impact on the ASX (Australian Stock Exchange):**
Futures pricing pointed
Read more on AUD/USD trading.