The dollar’s decline is at the center of the debate. It has dropped 14.5% against the euro and 11% versus a basket of major currencies, reaching a four-year low against the single currency at around USD 1.187 per EUR. The logic is textbook: lower rates increase dollar supply and reduce the appeal of dollar-denominated assets. For the US, this means more expensive imports and renewed inflation concerns. In Europe, the weaker dollar offers cheaper purchases abroad but erodes export competitiveness, hitting economies such as Germany and Italy that depend heavily on foreign sales.
 
Yet despite the slide, there has been no exodus from US assets. Quite the opposite: global investors remain heavily committed to American equities. The difference is that they are paying for protection. Deutsche Bank notes that 80% of the $7 billion that flowed into US equity ETFs over the past three months was currency-hedged, compared with just 20% at the start of the year. For European investors, the lesson of 2025 is clear: hedging matters. A plain S&P 500 ETF would have lost them about 1.35% year-to-date in euro terms, despite the index’s 12.3% gain in dollars. The hedged version, after fees, still delivers around 10.5%.
 
As former US Treasury Secretary John Connally told European leaders in the 1970s, “The dollar is our currency, but it’s your problem.” The remark resonates again today, as the Fed’s policy choices reverberate far beyond America’s borders. Rapid exchange-rate swings are reshaping investment strategies, with hedging now seen less as a luxury than as a necessity.
All eyes are on Washington today. The Federal Reserve is widely expected to cut rates by 25 basis points this evening at 8:00 p.m., the first move of what investors hope could be the start of a new easing cycle. Jerome Powell will face the press shortly afterward to explain the decision and outline the path ahead. Markets are bracing for nuance: Powell is unlikely to signal an open-ended dovish turn while inflationary pressures remain sticky. Traders expect further cuts, but know that the Fed chair will tread carefully.
 
Wall Street marked time yesterday ahead of the announcement. The Nasdaq 100, which came close to a tenth straight winning session, slipped 0.08% by the close. The S&P 500 also eased slightly, while bond yields remained under pressure. Across the Atlantic, losses were sharper: the German DAX fell 1.8%, dragged down by banks and industrial names, a reminder of how vulnerable Europe’s cyclical sectors are to monetary jitters and currency swings.
 
In geopolitics, Donald Trump held a call with Indian Prime Minister Narendra Modi to ease bilateral tensions, though details remain vague. The US president is scheduled to speak with China’s Xi Jinping on Friday, a conversation closely watched for any sign of thaw in US-China relations.
 
For now, markets wait. The rate announcement is due at 2:00 p.m., with Powell’s comments at 2:30 p.m., leaving one and a half hours of US trading for investors to digest the news. The tone he strikes could set the market mood for the weeks ahead.

In Asia-Pacific, caution prevails ahead of the US monetary verdict, with the Nikkei 225 down 0.2% in Japan, declines of 0.7% in Australia and Taiwan, and a 1.1% contraction in South Korea. India is faring better (+0.3%), while Hong Kong is up 1.5%, boosted by Baidu. A rebound is expected at the opening in Europe to cover the differential with the United States.

Today's economic highlights

Adjusted inflation figures for the United Kingdom and the eurozone will precede the release of building permits, housing starts, DOE crude inventories, and the FOMC's decision on interest rates at 2:00 p.m. in the United States. See the full agenda here.

  • USD / GBP: 0.7326 GBP
  • Gold: US$3,678
  • Crude Oil (BRENT): US$68.20
  • United States 10 years: 4.026%
  • BITCOIN: US$116,200

In corporate news:

  • Anglogold Ashanti: down between 1.5% and 3% in premarket trading, along with other gold miners, as precious metal prices weaken under pressure from a stronger dollar ahead of the Fed’s policy decision.
  • Barrick Mining: down between 1.5% and 3% in premarket trading, part of the broader decline in gold miners.
  • Chevron: commodity traders Vitol and Glencore are expected to submit formal bids to acquire a 50% stake in Singapore’s second-largest refinery, according to five sources cited by Reuters.
  • Eli Lilly: the experimental GLP-1 pill helped patients lose about 12% of their body weight, with weight loss stabilizing for most over a 72-week trial, according to full study results presented Tuesday at a medical congress. The company also said it is too early to assume it will use the FDA’s new accelerated review procedure for the drug, orforglipron. Meanwhile, Berenberg downgraded the stock to “hold” from “buy.”
  • Fedex: Evercore ISI downgraded the stock to “in line” from “outperform.”
  • General Mills: reported first-quarter revenue above estimates on Wednesday but maintained its full-year outlook, which calls for a decline in adjusted profit and organic net sales. Shares are down about 1% before the bell.
  • Gold Fields: down between 1.5% and 3% in premarket trading, in line with other gold miners.
  • Harmony Gold: down between 1.5% and 3% in premarket trading, along with the sector.
  • Merck: Berenberg downgraded the stock to “hold” from “buy.”
  • New Fortress Energy: surging 48% in premarket trading after announcing a deal to supply liquefied natural gas to the Puerto Rican government.
  • Newmont: down between 1.5% and 3% in premarket trading, part of the weakness in gold miners.
  • Nvidia: falling 1% in premarket trading after the Financial Times reported that China’s Cyberspace Administration (CAC) ordered the country’s largest tech firms to stop buying all chips from the US artificial intelligence giant.
  • Tesla: has reached confidential settlements in two lawsuits related to fatal crashes in California in 2019 involving its Autopilot driver-assistance software, according to court documents.
  • Workday: activist investor Elliott Management disclosed Tuesday that it had taken a stake of more than $2 billion in the human resources software provider, while expressing support for management. Shares are up nearly 10% in premarket trading.

Analyst Recommendations:

  • Apple: Tigress Financial Partners maintains its strong buy recommendation and raises the price target from $300 to $305.
  • Carrier Global: Oppenheimer maintains its outperform rating and cuts the price target from $85 to $75.
  • Cencora: Deutsche Bank maintains its buy rating and lowers the price target from $328 to $322.
  • Ferguson: Barclays maintains its overweight rating and raises the price target from $247 to $273. 
  • Grab Holdings: HSBC downgrades to hold from buy and raises the price target from $6 to $6.20.
  • Hasbro: Monness Crespi Hardt maintains its buy rating and raises the price target from $80 to $90.
  • Lennox International: Oppenheimer maintains its outperform rating and lowers the price target from $730 to $675.
  • Nebius Group: Goldman Sachs maintains its buy rating and raises the price target from $77 to $120.
  • Packaging Corporation of America: Truist Securities maintains its buy rating and raises the price target from $238 to $262.
  • Penske Automotive Group: Benchmark Co. maintains its buy rating and raises the price target from $185 to $190.
  • Rambus: Rosenblatt Securities maintains its buy rating and raises the price target from $90 to $130.
  • Sandisk: Arete Research maintains its buy rating and raises the price target from $63 to $102.
  • TransDigm Group: Jefferies maintains its buy rating and lowers the price target from $1,650 to $1,490.
  • US Bancorp: Truist Securities maintains its hold rating and raises the price target from $49 to $51.
  • Vistra: Daiwa Securities upgrades to buy from hold with a raised price target from $200 to $250.
  • Western Alliance Bancorporation: Janney Montgomery Scott maintains its buy rating and raises the price target from $94 to $100.
  • Workday: TD Cowen maintains its buy rating and lowers the price target from $310 to $290.