The U.S. dollar index (DXY) increased by 0.07% to reach a 2.5-week high, driven by a slump in stocks and President Trump’s announcement of a 30% tariff on EU and Mexican goods starting August 1. Cleveland Fed President Beth Hammack’s hawkish comments, stressing the need for inflation to fall further before considering interest rate cuts, also supported the dollar.
In related currency movements, the euro reached a new 2.5-week low following Trump’s tariff threats, while the yen slightly recovered from a 3-week low. Notably, Japan’s 10-year government bond yield rose to a 3.5-month high of 1.587%, strengthening the yen’s interest rate differentials.
Precious metals saw slight declines, with August gold down 0.06%, mainly due to the dollar’s strength and rising global bond yields. Despite initial gains driven by safe-haven demand from heightened tariff threats, market dynamics led to a drop in gold and silver prices.
