The dollar index (DXY) increased by +0.29% on Thursday, reaching a 3.5-week high due to signs of economic strength in the U.S. Weekly initial unemployment claims fell by 7,000 to a 3-month low of 221,000, contrary to expectations of an increase. Additionally, June retail sales rose by +0.6% month-over-month, surpassing predictions of +0.1%, while the July Philadelphia Fed business outlook survey rose to a 5-month high of 15.9, up +19.9 from the previous month.
Fed Governor Kugler advocated for holding interest rates steady, citing acceleration in inflation, while San Francisco Fed President Daly indicated two potential rate cuts of 25 basis points each by year-end. This mixed sentiment impacted the dollar, which experienced volatility following these comments.
In trade discussions, President Trump announced plans to send a tariff notice to over 150 countries, effective August 1, indicating possible tariff rates of 10% or 15%. Treasury Secretary Bessent is expected to meet with China’s Vice Premier soon, suggesting ongoing trade negotiations.
