Forex Today: Trump tariff letters keep markets on edge
Market participants stay away from risk-sensitive assets on Thursday as they try to assess the potential impact of the United States' ever-evolving trade policy on growth and inflation outlook. In the second half of the day, weekly Initial Jobless Claims data will be featured in the economic calendar. Investors will also pay close attention to comments from Federal Reserve (Fed) officials.
US President Donald Trump shared a new set of tariff letters on Wednesday and reiterated his warnings of imposing an additional 10% tariff on any country that aligns with the BRICS group. Additionally, Trump said that the 50% tariff on copper imports will go into effect on August 1. Libya, Algeria and Philippines are among the countries that received letters notifying them of tariffs between 20% and 30%. Wall Street's main indexes registered moderate gains on Wednesday. Early Thursday, US stock index futures are down about 0.2% and the US Dollar (USD) Index stays flat on the day at around 97.50.
The minutes of the Fed's June policy meeting showed on Wednesday that most participants anticipated that rate cuts would be appropriate later this year, noting that any price shock from tariffs was expected to be "temporary or modest.".
EUR/USD extends its sideways grind below 1.1750 after closing the day virtually unchanged on Wednesday. "We are working non-stop to find an initial agreement with the US to keep tariffs as low as possible and to provide the stability that businesses need," European Commission President Ursula von der Leyen said on Thursday.
GBP/USD holds its ground and trades slightly above 1.3600 after closing marginally lower on Wednesday.
Following a two-day rally, USD/JPY lost its traction and ended the day in negative territory on Wednesday. The pair struggles to find direction early Thursday and trades comfortably above 146.00.
After losing about 1% on Thursday, Gold failed to stage a decisive rebound on Wednesday and posted small gains. XAU/USD stays relatively quiet early Wednesday and trades near $3,320.
Source: FXstreet
