Dollar Eases to Approach 2-Month Lows
The dollar index hovered around 106.5 on Tuesday, nearing the two-month lows reached last week, as traders assessed the risks of a potential escalation in the trade war.
President Donald Trump signaled that tariffs on Mexican and Canadian imports, previously paused for a month, will take effect next week, while reports indicated the US is tightening restrictions on China’s chip industry and pressuring other governments to follow suit.
Meanwhile, concerns over the US economic outlook persisted after last Friday’s flash S&P Global PMIs unexpectedly revealed a contraction in the services sector, despite an acceleration in manufacturing growth.
The report also pointed to rising input costs and weakening business expectations amid growing uncertainty over government policies, prompting traders to increase bets on Fed rate cuts. Markets are now pricing in approximately 50bps of reductions in the federal funds rate this year.
Source: Trading Economics
