Forex Today: US Dollar selloff pauses ahead of US data, tariff headlines
Here is what you need to know on Tuesday, June 3:
Following the risk-averse action that weighed on the US Dollar (USD) at the beginning of the week, markets stabilize early Tuesday. The European economic calendar will feature preliminary inflation data for May and investors will pay close attention to the JOLTS Job Openings data from the US in the second half of the day. Several Federal Reserve (Fed) policymakers will also be delivering speeches during the American trading hours.
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 weakest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.67% | -0.48% | -0.63% | -0.09% | -0.39% | -0.59% | -0.58% | |
| EUR | 0.67% | 0.19% | 0.05% | 0.58% | 0.29% | 0.06% | 0.08% | |
| GBP | 0.48% | -0.19% | -0.12% | 0.39% | 0.10% | -0.14% | -0.11% | |
| JPY | 0.63% | -0.05% | 0.12% | 0.54% | 0.23% | 0.02% | -0.05% | |
| CAD | 0.09% | -0.58% | -0.39% | -0.54% | -0.29% | -0.51% | -0.49% | |
| AUD | 0.39% | -0.29% | -0.10% | -0.23% | 0.29% | -0.18% | -0.14% | |
| NZD | 0.59% | -0.06% | 0.14% | -0.02% | 0.51% | 0.18% | 0.03% | |
| CHF | 0.58% | -0.08% | 0.11% | 0.05% | 0.49% | 0.14% | -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).
Safe-haven flows dominated the financial markets on Monday as investors grew pessimistic about the United States (US) and China reaching a trade agreement. In the late American session, citing a draft letter addressed to the US' negotiating partners, Reuters reported that US President Donald Trump's administration is asking countries to deliver their best trade offers by Wednesday. Additionally, a White House spokesperson said that President Trump and Chinese President Xi Jinping were planning to meet later this week. These headlines helped the risk mood improve toward the end of the day and allowed the USD to find a foothold. Early Tuesday, the USD Index clings to small daily gains at around 99.00, while US stock index futures trade marginally lower.
In the minutes of its May policy meeting, the Reserve Bank of Australia (RBA) noted that it was not yet time to move the monetary policy toward an expansionary setting. Meanwhile, RBA Assistant Governor Sarah Hunter warned early Tuesday that higher US tariffs will put a drag on the global economy. After rising about 1% on Monday, AUD/USD stays under bearish pressure and loses more than 0.5% on the day near 0.6450.
Gold benefited from the risk-averse market atmosphere on Monday and climbed to its highest level since early May above $3,390. XAU/USD corrects lower early Tuesday but manages to hold slightly above $3,350.
EUR/USD edges lower following Monday's rally but stays above 1.1400. Annual inflation in the Eurozone, as measured by the change in the Harmonized Index of Consumer Prices, is forecast to soften to 2% in May from 2.2% in April. Eurostat will also publish the Unemployment Rate data for April.
GBP/USD stays in a consolidation phase above 1.3500 after closing decisively higher on Monday.
Bank of Japan (BoJ) Governor Kazuo Ueda said on Tuesday that the Japanese economy is recovering modestly, despite showing some signs of weakness. USD/JPY clings to small gains near 143.00 in the European morning on Tuesday after closing in negative territory for three consecutive days.
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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