U.S. dollar slips after tariffs-inspired gains; Aussie surges as RBA doesn’t cut
The U.S. dollar slipped lower Tuesday, retreating after sharp gains overnight, as traders digested the latest news surrounding U.S. President Donald Trump’s trade negotiations.
At 04:10 ET (08:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, edged 0.2% lower to 96.910, having climbed as high as 97.280 overnight.
Dollar hands back overnight gains
Trump announced late Monday that he has sent letters to 14 countries, including Japan and South Korea, unveiling sharply higher tariffs on imports into the United States.
The president also signed an executive order on Monday extending his July 9 deadline for trade agreements to Aug. 1, adding that this new deadline for imposing reciprocal tariffs is "not 100% firm” and that he’s open to alternate proposals if trade partners request changes.
“The market seems to be taking the view that nothing is final and that these letters merely mark another iteration on the journey towards a trade deal,” said analysts at ING, in a note.
“DXY [the dollar index] is consolidating above 96.50 and further consolidation within a broad 96.50-98.00 range looks likely. The next big macro input here should be the June CPI release, which is expected to show the start of rising price pressures.”
Euro gains on trade optimism
In Europe, EUR/USD climbed 0.5% to 1.1761, with the single currency boosted by optimism that the European Union may be able to negotiate a decent trade deal with the U.S.
GBP/USD gained 0.3% to 1.3642, but remains relatively close to last week’s top of 1.3787, the strongest level since October 2021.
The U.K. is one of the very few countries that has already signed a trade deal, while elevated inflation levels should ensure that the Bank of England remains relatively hawkish.
Aussie dollar surges after RBA stands pat
In Asia, USD/JPY traded 0.1% higher to 146.10, with the Japanese yen stabilizing after falling nearly 1% overnight after Tokyo received a letter from President Trump notifying that sharply higher duties will take effect on August 1.
Source: Investing.com
