Dollar Hits One-Week High as Tariff Deadline Looms
The dollar gained broadly, hitting its strongest in more than a week as a looming deadline on US trade restrictions chilled demand for riskier currencies, while speculation that the cut-off date for negotiations may be extended again offered an additional boost to the US currency.
The Bloomberg Dollar Spot Index rose around 0.5%, reaching its highest level since June 27; the greenback climbed versus the majority of G-10 currencies, strengthening the most versus the yen and the Australian and New Zealand dollars.
Treasury Secretary Scott Bessent on Sunday said letters being sent to trading partners this week aren’t the final word on immediate tariff rates; Levies will kick in on Aug. 1, giving countries without an agreement time to bring offers to make a deal, he added.
“Markets are treating this as yet another sign that the US administration is not serious when it comes to resurrecting the April version of Trump’s reciprocal tariffs,” FX analysts at Monex Europe wrote in a note, adding that this was supporting the dollar.
The higher-risk AUD/USD and NZD/USD both dropped around 1%, as lingering uncertainties on tariffs curbed risk demand; the currencies were also dragged lower by Trump signaling an extra 10% tariff on any country aligning itself “with Anti-American policies of BRICS”
“As tariff rates of 20% or more on major countries come into effect on August 1, this will inevitably prompt further downgrades in global growth forecasts, to which AUD and NZD have, to date, proved especially sensitive,” said Ray Attrill, head of FX strategy at National Australia Bank.
USD/JPY rose 0.7% to 145.44; the yen also came under pressure from data showing a surprisingly big fall in Japanese real wages.
EUR/USD slipped nearly 0.5% to 1.1722.
GBP/USD fell 0.5% to 1.3575.
USD/CNH gained 0.2% to 7.1738.
Source: Bloomberg
