FX Daily: Rare Earth Exports and Trade Tensions
China's rare earth export controls have become a key factor in determining risk appetite in the FX markets over the next four weeks.
The decision to impose export controls on rare earths has sparked concern in the US and G7 nations, making it a crucial topic for financial markets.
- The ability to negotiate these controls will be a major focus over the next four weeks.
- The dollar is currently softer, with short-dated US rates at their lowest for the year.
The Fed will have enough evidence to cut rates at the end of the month, despite suspended official data releases due to the government shutdown.
Betting markets expect the government shutdown to continue into November, with US-China relations being the hottest topic ahead of key dates.
Author's summary: Rare earth exports spark trade tensions.