US Dollar strengthens amid Trump’s trade escalation, cautious Fed
The US Dollar (USD) holds its footing on Thursday after a weak start to the day, as investors digest fresh tariff threats from US President Donald Trump.
The Greenback slipped during Asian trading hours and retraced some of this week’s gains. It also came under pressure from a sharp drop in Treasury yields, driven by strong demand in Wednesday’s 10-year note auction and signals in the June Federal Open Market Committee (FOMC) Meeting Minutes that interest rates could be lowered later this year.
The US Dollar Index (DXY), which measures the value of the Greenback against a basket of six major currencies, is edging higher during American trading hours after stronger-than-expected weekly labor data . At the time of writing, the index hovers around 97.60, recovering from a daily low of 97.27.
President Trump escalated his trade offensive on Wednesday by releasing a second round of tariff letters on his Truth Social platform. The new letters targeted seven additional countries -- including the Philippines, Brunei, Moldova, Algeria, Iraq, Libya, and Sri Lanka -- with proposed import tariffs ranging from 20% to 30%. The move adds to the growing list of nations facing potential US trade action and has heightened investor concerns over a broader global trade conflict, lending some support to the US Dollar.
He also issued a stern letter targeting Brazil, with a 50% tariff on its exports, citing the "witch hunt" trial of former Brazilian President Jair Bolsonaro, a right-wing ally of Trump. He wrote a letter to Brazilian President Luiz Inacio Lula da Silva, calling the trial an "international disgrace" and demanding it end "IMMEDIATELY!". While analysts consider this move politically charged, it highlights Trump’s hardline trade stance.
Source: Fxstreet
