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The dollar index (DXY) rose by 0.24% on Monday, reaching a 2.5-week high, following President Trump’s announcement of a 30% tariff on goods from the EU and Mexico starting August 1. This move raises concerns about inflation, which analysts believe may prevent the Federal Reserve from cutting interest rates. Cleveland Fed President Beth Hammack also supported this view, stating she prefers to see inflation decrease further before considering a rate cut.
The EUR/USD exchange rate fell by 0.21% to a new 2.5-week low, largely influenced by the tariff threat. Meanwhile, the USD/JPY rose by 0.22% as the yen weakened amidst rising Treasury yields and concerns related to upcoming elections in Japan. Over the weekend, Japan’s May tertiary index rose by 0.6% m/m, better than expectations, while core machine orders dipped by 0.6%, less than the anticipated 1.5% decline.
Concerns over U.S. inflation and rising global bond yields pressured precious metals, with August gold and September silver declining by 0.15% and 0.55%, respectively. Despite initial gains due to heightened tariff threats, the overall sentiment shifted negatively for precious metals as market conditions evolved.
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