Dollar Extends Drop on Tariff Woes and Weak US Data
The dollar hit a fresh cycle low after President Donald Trump said he plans to send letters to trading partners in the next one to two weeks setting unilateral tariff rates ahead of a July 9 deadline.
Wednesday’s CPI data also weighs on the greenback which falls against all Group-of-10 peers.
The Bloomberg Dollar Spot Index drops 0.5% to its lowest since July 2023; another 0.3% drop will mark a three-year low.
Vol skew coming under pressure across tenors; fresh interest for downside exposure emerges in the dollar, mainly through leveraged structures, a Europe-based trader says.
“US protectionist trade policy is a downside risk to growth and upside risk to inflation,” wrote Elias Haddad, a strategist at Brown Brothers Harriman & Co. “Bottom line: the fundamental USD downtrend is intact.”
EUR/USD rallies by 0.7% to 1.1565, up a fourth day, the longest winning streak in four months; the euro eyes 2025 high at 1.1573 amid bullish technical set up.
ECB Governing Council member Gediminas Simkus called for a pause in interest-rate moves, citing “very big uncertainty” over US tariff policy.
USD/JPY down 0.6% to 143.88; pair continues to be sold on intraday rallies by leveraged accounts that are taking their cues from sliding stock index futures, according to an Asia-based FX trader.
GBP/USD erased gains and fell to 1.3523 day low after data showed sharp tax increases and Trump’s tariffs triggered the UK’s biggest monthly contraction in 18 months.
Cable now up 0.2% at 1.3570 as the greenback comes under renewed pressure into the London-New York crossover.
Source : Bloomberg
