The dollar index (DXY00) rose by +0.30% on Monday, reaching a 1.5-week high, primarily due to weak stock performance that increased liquidity demand for the dollar. This rise was further bolstered by President Trump’s announcement of plans to increase tariffs on several countries, including Japan and South Korea, with rates between 25% and 40%, effective August 1. These higher tariffs may contribute to inflation and deter the Federal Reserve from cutting interest rates.
A Congressional Budget Office report indicates that the recently signed reconciliation bill will add $3.4 trillion to U.S. budget deficits over the next decade, negatively impacting the dollar’s strength amid concerns of a potential debt crisis. Additionally, EUR/USD fell by -0.48% due to dollar strength and weaker-than-expected Eurozone retail sales, which saw a -0.7% decline in May, marking the largest decrease in 1.75 years.
The USD/JPY rose sharply by +1.11% as the yen fell to a 2-week low, influenced by increased U.S. tariffs which may adversely affect the Japanese economy. In other economic news, Japan’s May leading index rose to 105.3, and labor cash earnings increased by +1.0% y/y, although below expectations of +2.4% y/y. Precious metals experienced downward pressure but recovered slightly as safe-haven demand increased due to prevailing trade tensions.
5 Stocks Our Experts Predict Could Double In the Next Year
By submitting your email, you'll also get a free pivot & flow membership. A free daily market overview. You can unsubscribe at any time.
