US Dollar Index weakens below 97.50 on fresh tariff threats

FXStreet
Updated
Mitrade
coverImg
Source: DepositPhotos

  • The US Dollar Index loses ground near 97.30 in Thursday’s Asian session, down 0.17% on the day. 

  • Fed officials split between concerns over tariff-fueled inflation and signs of labor market weakness and economic strength, noted the Fed Minutes. 

  • The US weekly Initial Jobless Claims data will be the highlight later on Thursday. 

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, retreats from near a two-week high to 97.30 amid tariff threats after US President Donald Trump unveiled a new round of tariff demand letters. 

Trump on Wednesday said he would impose a 50% tariff rate on Brazil, one of the highest so far announced for the levies, which will take effect in August. He also said that he will slap a 30% duty on Algeria, Libya, Iraq, and Sri Lanka, 25% on Brunei and Moldova, and 20% on goods from the Philippines. 

Furthermore, Trump said Wednesday that the new 50% tariff on US copper imports, which he had announced the previous day, will take effect on August 1, per Reuters. The decision was made after he received a national security assessment. The uncertainty around tariff policies and the impact of tariffs on the US economy could weigh on the Greenback in the near term.

According to the Federal Reserve's (Fed) June 17-18 meeting, FOMC Minutes, few officials expressed the view that interest rates might decrease as early as this month, while the majority of policymakers continued to have concerns regarding the inflationary pressures anticipated from Trump's implementation of import taxes aimed at altering global trade. 

Most participants at the Fed's meeting saw some reduction in the Fed funds rate this year as appropriate, citing that any price shock from tariffs was expected to be "temporary or modest.”  

Later on Thursday, traders will keep an eye on the release of US weekly Initial Jobless Claims data. If the report shows a stronger-than-expected outcome, this could help limit the USD’s losses in the near term. Apart from this,  the Fed officials are set to speak later on the same day, including Alberto Musalem, Christopher Waller, and Mary Daly. 

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
Dollar and long-term Treasuries fall as Trump intensifies Fed clash; gold gainsThe dollar and long-term U.S. Treasury bonds declined on Tuesday following President Donald Trump’s unprecedented move to dismiss Federal Reserve Governor Lisa Cook.
Author  Mitrade
Aug 26, Tue
The dollar and long-term U.S. Treasury bonds declined on Tuesday following President Donald Trump’s unprecedented move to dismiss Federal Reserve Governor Lisa Cook.
placeholder
Asian Currencies Steady as Fed Rate Cut Expectations Weaken; Yen Strengthens on Robust Q2 GDPMost Asian currencies remained relatively stable on Friday following stronger-than-anticipated U.S. producer inflation figures, which diminished expectations for aggressive Federal Reserve rate cuts.
Author  Mitrade
Aug 15, Fri
Most Asian currencies remained relatively stable on Friday following stronger-than-anticipated U.S. producer inflation figures, which diminished expectations for aggressive Federal Reserve rate cuts.
placeholder
Dollar Weakens on Growing Fed Cut Expectations; Bitcoin Hits New Record HighThe U.S. dollar dropped to multi-week lows on Thursday as traders intensified expectations that the Federal Reserve will resume cutting interest rates next month.
Author  Mitrade
Aug 14, Thu
The U.S. dollar dropped to multi-week lows on Thursday as traders intensified expectations that the Federal Reserve will resume cutting interest rates next month.
placeholder
Asian Currencies Flat as Dollar Weakens on Stronger September Rate Cut ExpectationsMost Asian currencies showed limited movement on Wednesday as the U.S. dollar continued to recover from overnight losses following softer-than-expected U.S. consumer inflation data.
Author  Mitrade
Aug 13, Wed
Most Asian currencies showed limited movement on Wednesday as the U.S. dollar continued to recover from overnight losses following softer-than-expected U.S. consumer inflation data.
placeholder
Dollar Inches Lower as Markets Await U.S. Inflation Data; Sterling Edges UpThe U.S. dollar slipped modestly on Tuesday as investors awaited the upcoming release of July’s U.S. consumer price index (CPI), a critical indicator that could influence Federal Reserve interest rate decisions.
Author  Mitrade
Aug 12, Tue
The U.S. dollar slipped modestly on Tuesday as investors awaited the upcoming release of July’s U.S. consumer price index (CPI), a critical indicator that could influence Federal Reserve interest rate decisions.
Real-time Quote