Forex Today: US tariff headlines limit USD upside ahead of key inflation data
Here is what you need to know on Friday, May 30:
The US Dollar (USD) struggles to gather strength against its rivals following Thursday's volatile action as investors assess the latest headlines surrounding tariffs. The US economic calendar will feature Personal Consumption Expenditures (PCE) Price Index data, the Federal Reserve's preferred gauge of inflation, for April on Friday.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.16% | 0.34% | 0.92% | 0.64% | 1.03% | 0.32% | 0.27% | |
| EUR | -0.16% | 0.19% | 0.80% | 0.48% | 0.87% | 0.16% | 0.12% | |
| GBP | -0.34% | -0.19% | 0.31% | 0.29% | 0.68% | -0.02% | -0.06% | |
| JPY | -0.92% | -0.80% | -0.31% | -0.29% | 0.08% | -0.67% | -0.67% | |
| CAD | -0.64% | -0.48% | -0.29% | 0.29% | 0.40% | -0.31% | -0.34% | |
| AUD | -1.03% | -0.87% | -0.68% | -0.08% | -0.40% | -0.74% | -0.74% | |
| NZD | -0.32% | -0.16% | 0.02% | 0.67% | 0.31% | 0.74% | -0.03% | |
| CHF | -0.27% | -0.12% | 0.06% | 0.67% | 0.34% | 0.74% | 0.03% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The USD outperformed its rivals early Thursday after the Court of International Trade announced that US President Trump's 'Liberation Day' tariffs will be blocked from going into effect. Later in the day, mixed macroeconomic data releases and the Court of Appeals for the Federal Circuit's decision to reinstate tariffs during the review process caused the USD to lose its strength. Moreover, US Treasury Secretary Scott Bessent said on Thursday that trade talks between the US and China are "a bit stalled" and added that finalizing a deal will likely require direct involvement of President Trump and Chinese President Xi Jinping. Finally, the Wall Street Journal reported that the Trump administration is considering allowing tariffs of up to 15% for 150 days.
Meanwhile, the Federal Reserve (Fed) released a statement late Thursday, noting that Fed Chairman Jerome Powell met with President Trump and told him that the monetary policy will be set based on trackable data for the economy. After losing about 0.5% on Thursday, the USD Index clings to small recovery gains at around 99.50 in the European morning on Friday and US stock index futures trade modestly lower on the day after Wall Street's main indexes registered marginal gains on Thursday.
The data from Germany showed earlier in the day that Retail Sales declined by 1.1% in April. This reading came in worse than the market expectation for a 0.2% increase. Later in the European session, Germany's Destatis will publish preliminary regional and nation-wide Consumer Price Index data for May. After closing in positive territory on Thursday, EUR/USD seems to have entered a consolidation phase at around 1.1350 early Friday.
Following a sharp decline in the Asian session, Gold reversed its direction and closed higher on Thursday. XAU/USD struggles to keep its footing and retreats to the $3,300 area in the European morning on Friday.
GBP/USD stays relatively quiet below 1.3500 after posting small gains on Thursday. Bank of England (BoE) Governor Andrew Bailey noted late on Thursday that the primary drivers behind the BoE's main reference rate remains the economic needs of the United Kingdom (UK), not external drivers such as the Trump administration's tariff policies.
USD/JPY made a sharp U-turn after setting a new two-week high above 146.00 on Thursday and ended up losing about 0.5% for the day. The pair stays under modest bearish pressure and trades below 144.00 to start the European session.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
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