US dollar slips against euro but maintains weekly gains
Data last Tuesday showed that consumer prices rose in June, though the increase was seen as moderate. Wednesday's producer price inflation report showed that prices were steady last month.
Powell has said that he expects inflation to rise this summer as a result of Trump's tariff policies. His comments have pushed out expectations of when the US central bank is likely to cut interest rates.
But the labour market is showing signs of weakness even as headline job gains and the unemployment rate remain relatively solid.
'We're waiting on the tariffs to become real and not just a negotiating ploy and waiting on the labour market to reveal itself,' said Lou Brien, strategist at DRW Trading in Chicago.
'Layoffs are at a lower level than they were pre-pandemic, but the hiring is terrible. And if, all of a sudden, the layoffs come up, we're going to get a significant increase in the unemployment rate very quickly,' Brien said.
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Fed governor Chris Waller said on Friday that he favours a rate cut at the July meeting because he feels tariffs are likely to have a limited impact on inflation. Waller added that underlying data 'are not indicating a super healthy private sector labour market', and the Fed should 'get ahead' of a possible hiring slowdown.
Powell is facing almost daily criticism from Trump over the Fed's reluctance to cut rates. The US dollar tumbled on Wednesday on reports that Trump was planning to fire the Fed chair, but rebounded after Trump denied the reports. Powell's term will end in May.
Chicago Fed President Austan Goolsbee said he is a 'little wary' about signs in the June consumer price index that tariffs are pushing up goods inflation, but still believes the US economy is in a good place and the Fed's policy rate can come down a 'fair bit' over the next 12 months.
Fed funds futures traders are pricing in 46 basis points of cuts by year-end, implying that two 25 basis point cuts are seen as most likely, with the first coming in September.
The dollar index was roughly flat on the day at 98.49, and is on track for a 0.65 per cent weekly gain.
The euro was last up 0.22 per cent at US$1.1621 but is headed for a weekly drop of 0.59 per cent.
The euro pared gains after the Financial Times reported that Trump is pushing for a minimum tariff of 15-20 per cent in any deal with the European Union.
Sterling was flat at US$1.3411 and is heading for a weekly decline of 0.64 per cent.
The Japanese yen was slightly lower against the greenback heading into Sunday's upper house election, in which Japan's ruling party looks vulnerable.
The US dollar gained 0.1 per cent to 148.75 yen and is on track for a weekly gain of 0.93 per cent.
Polls suggest Japan's ruling coalition is at risk of losing its majority, which would stir policy uncertainty at home and complicate tariff negotiations with the US.
US Treasury Secretary Scott Bessent told Japanese Prime Minister Shigeru Ishiba that their countries can reach a 'good agreement' on tariffs, Ishiba said on Friday after meeting Bessent in Tokyo. REUTERS
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Straits Times
9 hours ago
- Straits Times
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Under the leadership of Mr Tamiya, who replaced his father as the company's president, Tamiya Inc won popularity worldwide for making kits that excelled in quality and historical detail. In 1967, one of its miniature models so faithfully reproduced a Formula One racing car, down to the location of a starter battery beneath the driver's seat, that the maker of the original vehicle, Honda Motor, wondered if he had access to trade secrets but decided to let it pass. His pursuit of accuracy also once took him to the embassy of the Soviet Union in Tokyo, where he sought details about Warsaw Pact tanks. This drew the attention of Japan's public security bureau, which placed him under surveillance for a time. Mr Tamiya was serving as the company's chair at the time of his death. According to the company, he still enjoyed standing at the entrance to an annual trade show near Tamiya's headquarters in Shizuoka, a city south of Tokyo, to watch the children come in. 'He turned our city of Shizuoka into a world center of plastic models,' Mayor Takashi Namba told reporters after learning of Mr Tamiya's death. 'He also built a global brand. I truly respected him.' Although the company continues to produce model kits in Shizuoka, it also opened a factory in the Philippines in 1994. Top stories Swipe. Select. Stay informed. 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Straits Times
10 hours ago
- Straits Times
‘US needs China's fireworks': No alternative for some Chinese goods amid trade uncertainty
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When Mr Trump proclaimed 'Liberation Day' on April 2 with 'reciprocal tariffs' on the US' trading partners, Beijing and Washington engaged in a tit-for-tat tariff war. At one point, American importers had to pay a 145 per cent tax on Chinese goods. But bilateral trade talks since May 12 have de-escalated the situation. US and Chinese officials are set to meet in Stockholm next week (from July 27) to discuss a possible extension of a 90-day truce. The fireworks industry presents a case study showing how, despite trade tensions and strategic competition, the US and China remain economically intertwined. While US businesses now adopt a cautious approach in placing orders, the deals have continued to flow as Chinese manufacturers remain competitive. Liuyang has over decades accumulated the technical know-how, the quality of its raw materials, proper regulatory oversight and strict transportation requirements, Mr Wu said. Factories dot the surrounding mountainous terrain of the city, about an hour's drive from the inland Hunan capital of Changsha. Production has to stop for about a month for safety reasons every summer because of the heat. 'America needs fireworks – this will not change,' said Mr Wu. 'At the very most, they will buy fewer, but they will not stop buying completely. In addition, we have good relations with our customers who trust in our products, and they also believe that this (tariffs issue) is temporary.' Screenshot from a video Mr Wu took of a Fourth of July fireworks celebration in Ohio earlier in July. His company's products were used. PHOTO: MARX WU According to the American Pyrotechnic Association, 90 per cent of professional display fireworks used in the US are imported from China. Reports say that US companies import close to US$400 million worth of consumer fireworks from China each year. More than 200 other imported products depend on China for more than 90 per cent of their supply, including baby carriages, vacuum flasks, umbrellas and artificial plants. Mr Stephen Olson, a visiting senior fellow at the ISEAS-Yusof Ishak Institute in Singapore who specialises in international trade, said that despite all the conflicts and tension, trade between the US and China has remained remarkably resilient. Although China's exports to the US declined in the first half of the year, China remains among the US' largest trade partners and will continue to be so for the foreseeable future, he said. China's exports to the US declined by 10.7 per cent in the first half of 2025, compared to the same period in 2024, a drop of US$25.7 billion. 'Trump's tariffs have undoubtedly dented China's cost competitiveness but the resilience of China's exports reflect the simple fact that China is the world's preeminent manufacturer and is overwhelmingly competitive in a host of consumer products and industrial inputs. It's simply not possible to cut China entirely out of US consumer markets or supply chains,' Mr Olson said. Mr Steve Houser, president of Missouri-based Red Rhino Fireworks who was on a work trip to China, said he has already placed his orders for 2026, but added that he – like other major importers – is doing so much more cautiously. 'I'm being very particular on what I order. I'm ordering only what I really, really need. I'm not really taking chances on other things because of the tariff rates; the goods are costing me a lot more,' he told ST. He said that the National Fireworks Association in the US was recently in Washington DC to make the case that fireworks should be exempt from the across-the-board tariffs of 30 per cent, as there are no viable alternative suppliers from other countries. Apart from the fireworks business, the US-China trade war has resulted in uncertainty for many exporters, such as those in Yiwu, of Zhejiang province, which is home to the world's largest wholesale market for small commodities. The sprawling Yiwu International Trade City hosts more than 70,000 shops selling products from cosmetics to stationery, backpacks and Christmas decorations. Most shops that stocked Halloween and Christmas decorations at the trade city declined to speak with ST in early July, when it is usually the peak sales season for these products. A few shop owners would only say that business is slower in 2025, while others said they were not authorised to speak with the media. Rows of dozens of shops at Yiwu International Trade City in Zhejiang province selling Christmas decorations were largely empty when ST visited in early July. ST PHOTO: LIM MIN ZHANG Ms Guo Xiabing, an entrepreneur in Zhejiang who runs a factory making Christmas trees in Yiwu, said that typically, US customers are more able to afford higher-priced products, such as those with more fanciful ornaments. She shared about her factory's race to ship orders in the 90-day trade truce between the US and China in a documentary aired in June. 'Customers also do not want to give up on the orders. But that also means that we are left hanging, not knowing when we can resume production and shipping. This type of uncertainty causes a lot of anxiety. Should we let go of the workers? How would we find jobs for them?' she said. Yet others have taken a longer-term view, and have long made efforts to diversify away from the US market. Chief executive of Aokai Sporting Goods in Yiwu, Mr Wu Xiaoming, who has been in the industry for 30 years, counts the South American and African markets as his major customers - at about 50 per cent and 20 per cent respectively - with the US market accounting for only about 5 per cent. Chief executive of Aokai Sporting Goods in Yiwu, Mr Wu Xiaoming, inspecting a football bound for Nicaragua at his factory in Yiwu city, Zhejiang province. ST PHOTO: LIM MIN ZHANG He recalled that there was one American customer who called him to resume an order on May 13, shortly after news of successful US-China trade talks in Geneva was announced, as well as to place a new order for 90,000 footballs. His orders from the US are mainly for supermarkets. 'For the US market, the volume is still there. But it is US consumers who have to bear the cost (of the tariffs). If you force us to lower our costs, it means the quality of the product suffers, so ultimately it's still the consumers who pay the bill,' Mr Wu said. He believes that diversification is necessary for his company's viability, not only because of trade frictions, but also due to other sources of instability. He cited examples such as a Croatian client that halted a shipment because of the Kosovo War in 1998, and how demand from Russia has plummeted because of the Ukraine war. 'There has not been a period where the entire world was completely at peace... In Yiwu, we engage in global trade. If the West doesn't shine, the East will.'
CNA
10 hours ago
- CNA
Australia, Britain sign 50-year AUKUS submarine partnership treaty
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