The U.S. dollar index (DXY00) fell by 0.57% on Monday, reaching a 3-1/4 year low, largely due to uncertainties surrounding U.S. trade policies as nations seek to finalize trade deals before President Trump’s July 9 deadline. Simultaneously, the Congressional Budget Office forecasts that new measures could add nearly $3.3 trillion to U.S. deficits over the next decade. The dollar’s decline was compounded by a unexpected contraction in the June MNI Chicago PMI, which dropped to 40.4, below the anticipated 43.0.
Despite the dollar’s weakness, signs of progress in trade negotiations with China, the EU, and Canada provided some support for the currency. The euro (EUR/USD) rose by 0.51% to a new 3-3/4 year high, even amidst disappointing Eurozone economic data, such as a 1.6% decline in German retail sales for May. Meanwhile, the yen (USD/JPY) fell by 0.48%, bolstered by safe-haven demand following comments from President Trump regarding Japanese auto trade.
In precious metals, gold prices increased by $20.10 (+0.61%), benefiting from the dollar’s decline and growing demand for safe-haven assets, as gold ETF holdings reached a 1-3/4 year high. Silver, however, fell by $0.185 (-0.51%), influenced by concerns over industrial demand linked to the contraction in the Chicago PMI.
