Dollar dithers as investors await more tariff clarity
The dollar edged up on Tuesday, but activity across the currency market was subdued, as investors awaited any signs of progress in talks ahead of an August 1 deadline that could bring steep tariffs for U.S. trading partners that fail to strike deals.
The yen mostly held on to gains from the previous session following results from a weekend upper house election in Japan that proved no worse than what had already been priced in, with focus now on how quickly Tokyo can strike a trade deal with Washington and Prime Minister Shigeru Ishiba's future at the helm.
With little over a week to go before August 1, U.S. Treasury Secretary Scott Bessent said on Monday the administration is more concerned with the quality of trade agreements than their timing.
Asked whether the deadline could be extended for countries engaged in productive talks with Washington, Bessent said President Donald Trump would make that decision.
Uncertainty over the eventual state of tariffs globally has been a huge overhang for the foreign exchange market, leaving currencies trading in a tight range for the most part, even as stocks on Wall Street have scaled fresh highs.
The euro eased slightly to $1.1692. The European Central Bank is also in the mix this week, although it is not expected to adjust euro zone interest rates.
A deal between the European Union, which could face 30% tariffs from August 1, and the U.S. remains elusive. EU diplomats said on Monday they were exploring a broader set of possible counter-measures given fading prospects for an agreement.
Separately, the ECB said in a survey on Tuesday that loan demand from euro zone companies improved last quarter and is expected to pick up in the current quarter, in spite of the threat of tariffs and higher geopolitical tensions.
Against a basket of currencies, the dollar rose 0.1% to 97.91, having fallen 0.6% on Monday.
Also weighing on investors' minds were worries about Federal Reserve independence, given Trump has repeatedly railed against Chair Jerome Powell and urged him to resign because of the central bank's reluctance to cut interest rates.
The yen remained in focus on Tuesday, trading a touch weaker on the day at 147.64, having gained 1% on Monday following the weekend election and a public holiday.
Source : Reuters
