The dollar index (DXY) dropped by 0.43% on Tuesday, with the likelihood of a Federal Reserve rate cut increasing to 96% for the September meeting, up from 88%. This shift followed a neutral July Consumer Price Index (CPI) report, which showed a month-over-month increase of +0.2% and a year-on-year figure of +2.7%, unchanged from June.
In other economic news, President Trump extended a tariff truce with China for another 90 days and announced a 100% tariff on semiconductor imports with potential exemptions. He also plans to double tariffs on US imports from India to 50%. If all proposed tariffs are implemented, the average US tariff is projected to rise to 15.2% from 13.3%.
Amid these developments, the 10-year T-note yield increased by 0.4 basispoints to 4.289%. Meanwhile, the EUR/USD rose by 0.52% due to dollar weakness, despite cautious sentiment regarding US tariffs affecting the European economy. Gold prices saw slight support from the potential Fed rate cut, with ETF holdings reaching a two-year high.
