Dollar Index Extends Rebound
The dollar index rose to 97.7 on Tuesday, extending its rebound since touching the over-three-year low of 96.8 touched on July 2nd as markets assessed how the fresh wave of tariffs mandated by President Trump will impact capital flows and the outlook for fiscal and monetary policy.
Trump placed aggressive tariffs on key Asian trading partners, including 25% levies on Japan and Korea in addition to sector specific tariffs on autos and metals that have a high impact on both economies, to be enforced on August 1st.
The President also signaled that additional levies may be passed against countries that reciprocate to tariffs or mandate "anti-American policies of BRICS". The dollar gained the most against the yen due to lower foreign exchange demand in Japan following the tariffs.
Last week, bets of a rate cut by the Fed this month were nearly erased following a strong jobs report.
Source: Trading Economics