Dollar heads for biggest weekly drop in a month as focus shifts to Fed, BOJ meets
Both the U.S. Federal Reserve and the Bank of Japan are expected to hold rates at next week's policy meetings, but traders are focusing on the subsequent comments to gauge the timing of the next move.
'Next week's BOJ policy meeting will be closely watched for hints on the timing of the next rate hike,' said Carol Kong, currency strategist at Commonwealth Bank of Australia.
The prospect of rate hikes by the BOJ had improved, she added, after a trade deal struck with the United States this week lowered tariffs to 15% on auto imports from Japan.
The yen stood at 147.10 to the dollar, on course for a weekly gain of 1%, its strongest such performance since mid-May.
Yen, euro lifted by progress on trade
A majority of economists in a Reuters poll this week expect Japan's central bank to raise interest rates by 25 basis points this year.
The dollar index , which measures the U.S. currency against six other units, was at 97.448, set for a drop of 1% this week, its weakest performance in a month.
On Thursday, the European Central Bank left its policy rate at 2%, as expected, in a break from a year of policy easing, to await clarity over future U.S. trade ties after the European Commission said a negotiated solution was in reach ahead of the August 1 deadline.
The euro was little changed at $1.1754 in early trade, but not far from $1.183, the near four-year high it touched at the start of the month.
The euro is up 13.5% this year as tariff policies take the shine off the dollar.
Progress on trade deals has also raised market hopes for talks with China, after U.S. Treasury Secretary Scott Bessent said officials of both countries would meet in Stockholm next week to discuss an extension of the deal negotiation deadline.
The Australian dollar has been boosted by the rise in risk appetite after the trade deals and was last at $0.6593, hovering near an eight-month high touched on Thursday.
Trump's FED visit
Donald Trump locked horns on Thursday with Fed Chair Jerome Powell during a rare presidential visit to the central bank, criticising the cost of renovating two historical buildings at its headquarters and pressing the case for lower interest rates.
Markets mostly shrugged off the visit, however, having become accustomed to Trump's repeated tirades against Powell and the Fed.
'Trump's Fed visit was spectacle over substance,' said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities.
'The market's focus is firmly on next week's Fed meeting. We expect Powell to repeat a patient, data-dependent policy outlook with flexibility but (he) is unlikely to commit to cuts.'
At their two-day rate-setting meet, the central bank's 19 policymakers are widely expected to leave their benchmark interest rate in the range of 4.25% to 4.50%. Traders are pricing in 43 basis points of rate cuts by the end of 2025.
ANZ strategists expect the Fed to cut rates by 25 basis points in September and again in December. 'Were it not for tariff uncertainty, we judge that rate cuts would already have resumed,' they said in a note.
'The labour market is weakening, service price disinflation is well established, demand growth has slowed and there is no discernible evidence that higher tariffs are spilling into a broader inflation problem.'
In cryptocurrencies, bitcoin eased 0.79% to $117,840, while Ethereum was 2% lower at $3,655.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
an hour ago
- Express Tribune
The trade brawl
Listen to article India and the United States seem to have hit an unending argument over tariffs. The brinkmanship, however, is on the part of White House as President Trump has honed an attitude of pushing his allies and adversaries to the wall as he goes on to negotiate new trade concessions. Trump's new-found irksomeness with Russia, after a brief episode of cordiality, is at the crux of policymaking as the White House incumbent wants to penalise every state that indulges in profitable business with Moscow. Trump's decision to slap 50% tariffs on imports from Delhi, doubled from 25%, as a penalty for oil imports from Russia is likely to dip their bilateralism to lowest ebbs. India is also being blamed for fuelling the war in Ukraine, and for outsourcing Russian oil to destinations in Europe. In a rejoinder, Delhi says that its purchases from Russia have helped stabilise oil prices by easing the pressure on supplies from other regions. Trump's new contention, nonetheless, is that India should offer "zero tariff" for US goods import into India, and this is literally an unworkable equation. Thus, the standoff is graduating into one of the biggest trade brawls at a time when the US administration has not been able to settle down with China, Canada and major European partners over tariffs and concessions. Pakistan, apparently, was smart enough to get away with 19% tariffs — a rolled-down equation in adverse circumstances. This singling out of India is likely to have an impact in strategic terms with the US, as Delhi has no choice but to stick to its oil imports from Russia that account for one-third of its consumption. Will this jeopardise the special relationship Trump and Indian PM Narendra Modi were eager to strike in South Asia in terms of containing China is anybody's guess. India would be better advised to value regionalism, and open new vistas of cooperation with Beijing as well as Islamabad. There is a lot in geo-economics to share, and India's attitude of segregation is costing connectivity and prosperity in the region.
Express Tribune
2 hours ago
- Express Tribune
Pakistan — between Beijing and Washington
The writer is a retired major general and has an interest in International Relations and Political Sociology. He can be reached at tayyarinam@ and tweets @20_Inam Listen to article Something unexpected happened after Indian Operation Sindoor and Pakistan's agile response through Operation Bunyan Marsus. The four-day skirmish left India red-faced despite its massive media onslaught, projecting the outcome as victory. President Trump took credit for the ceasefire, duly acknowledged by Pakistan, while an egotistic India still refuses to accept foreign interlocution. Then, on August 1, 2025, President Trump slapped a punitive 25% tariffs on India, letting Pakistan off with a relatively benign 19%. Earlier Trump had feted out Field Marshal Asim in the White House. He announced a massive trade deal with Pakistan on July 30. Cumulatively, the cited developments bring Pakistan back into relevance, and business with the West Plus, re-hyphenate it with India, debunk the massive Indian propaganda to paint Pakistan as 'Terroristan', and open new vistas for Islamabad. However, this closeness with the US again, to some analysts, is at the cost of Pak-China friendship. First Islamabad and Beijing. Two statements on August 1 — one from Foreign Office and the other from ISPR — clearly articulated the special nature of Pak-China friendship in context. Foreign Office spokesperson emphatically highlighted the decades-old strategic partnership with Beijing, notwithstanding Islamabad's relations with other countries. And perhaps for the first time, GHQ celebrated the 98th founding anniversary of China's People's Liberation Army on August 1 with a dignified ceremony attended by high-ranking Chinese officials. Chinese Ambassador Jiang Zaidong was the chief guest. The Middle Kingdom conducts its foreign relations in a very matured, measured and deliberate manner. One remembers being part of a delegation led by the Chairman Joint Chief of Staff Committee, wherein bilateral exercise between both air forces was being discussed. When Pakistan had to remove the US-supplied F-16s from the planned manoeuvres at some later hours, the Chinese Defence Minister, Mr Lee Quang Li was extremely conciliatory to address the embarrassment. Chinese relations do not come with geo-strategic caveats. They ostensibly believe in 'harmony' and are sensitive to other nations' imperatives and compulsions. So, any closeness with the US is not, will not and should not come at the cost of Pak-China bilateralism, brotherhood and benevolence. Second, the conduct of the Pak-US relations. Since partnership against communism in the US-led SEATO, CENTO, GWOT, Islamabad has traditionally remained closer to the US, providing back-channel support to the 1971 Sino-US détente. Pakistan's military benefited particularly from the US hardware, doctrine and training. Our cantonments in Kharian, Multan and Gujranwala got infrastructure support from Washington. However, from geo-strategic partnership, Pakistan was later relegated to relative obscurity by Trump 1.0 and Biden Administrations, thanks partly to the pervasive Indian influence traditionally on the US policy apparatus. Trump 2.0 is more transactional, upending the traditional US geo-strategic construct and hence the punitive tariffs on India, and favour with Pakistan. Pakistan has, reportedly, the fourth largest hydrocarbon reserves along its coast. It must have been the size of these reserves that sparked President Trump's comment on X/Truth Social — "We are in the process of choosing the oil company that will lead this Partnership. Who knows, maybe they'll [Pakistan] be selling Oil to India one day." This is an unsettling discovery for Pakistan/region and good business for the US energy giant ExxonMobil that 'might' bid for and undertake offshore drilling. Any US company doing exploration would automatically ensure security of the operation. The growing Pak-US counterterrorism cooperation and mutual alignment over Afghanistan are also likely to cement bilateral ties, with China benefitting from a secure regional environment. Under the last PTI government, ExxonMobil, then undertaking offshore exploration, was not allowed access to an additional area in Kekra field. Pakistan 'expects' ExxonMobil to come back as negotiations move forward. More recently, Pakistan also inked an agreement to import US crude with first shipment expected in October. While earlier, Washington had refused to export LNG to Pakistan, given joint ventures between the US and Indian companies, implying Islamabad to go through New Delhi. Today the US Exim Bank is interested in providing capital to the stalled Reko Diq copper and gold mining project. American companies are mulling joint ventures with Pakistani firms to tap Pakistan's mineral sector, with an estimated potential of $ 8trillion. And GB, KP and Balochistan have substantial deposits of rare earths. Additionally, Pakistan's bitcoin policy also interests Trump personally. All this fits his economic outlook. Third, Pakistan's delicate diplomatic balancing. In a meeting with the Afghan acting Ambassador in Islamabad last year, Ambassador Sardar Ahmed Shakeeb mentioned that IEA leadership was very impressed with the way Pakistan handled its relations with America. As per an Indian analyst, Biswanath Bhattacharya, Islamabad has perfected 'balancing contradictions so deftly that even gravity seems to look on in admiration'. Despite being tethered economically and strategically to China, Islamabad is able to carve an advantage from a transactional, mercurial and unpredictable Trump White House, under the overall environment of Sino-US hostility. From being a vanguard nation in the Chinese BRI through CPEC, Pakistan not only secured a deal for American oil investment, but it also earned public endorsement from President Trump. In the last fiscal year, Pakistan's exports to the US stood at $6 billion, against $2.4 billion worth of imports. The ensuing surplus of $3.7 billion was worrying for President Trump. However, Pakistan under the new 19% tariff is still at relative advantage, compared to India's 25%, Bangladesh's 20%, Iraq's 35%, Vietnam's 20% and 19% for Malaysia, Thailand and Indonesia. Pakistan, in trade negotiations, secured duty-free access to over 4,100 American products. Avoiding bloc politics, Pakistan's diplomatic work endears it today to the world powers — China, the US and Russia — increasingly through its geo-strategic relevance, and gutsy and matured dealings with a bellicose and arrogant India. Islamabad's foreign service understands that 'survival and prosperity depend on cultivating relationships with all major players'. It has been able to balance the dictates of BRI/CPEC through increasing cooperation with the US on Afghanistan, counterterrorism, and now, potentially on minerals, oil and gas. The oil deal marks a watershed in exploiting Pakistan's untapped hydrocarbons with American money and technology. These "fourth largest" reserves would catapult Pakistan from energy import to export, rewriting the region's geo-economics. Mr Bhattacharya admires "Pakistan's astonishing ability to dance on the diplomatic tightrope — undaunted, unbowed, and, for now, undefeated".
Business Recorder
2 hours ago
- Business Recorder
Lula rejects ‘humiliation' of calling Trump over US-Brazil tariff
BRASILIA: As U.S. tariffs on Brazilian goods jumped to 50% on Wednesday, Brazil's President Luiz Inacio Lula da Silva told Reuters in an interview that he saw no room for direct talks with U.S. President Donald Trump which he believes would turn into a 'humiliation' for him. Brazil is not about to announce reciprocal tariffs, he said. Nor will his government give up on cabinet-level talks. But Lula himself is in no rush to ring the White House. 'The day my intuition says Trump is ready to talk, I won't hesitate to call him,' Lula said in an interview from his presidential residence in Brasilia. 'But today my intuition says he doesn't want to talk. And I'm not going to humiliate myself.' Despite Brazil's exports facing one of the highest tariffs imposed by Trump, the new U.S. trade barriers look unlikely to derail Latin America's largest economy, giving Lula more room to stand his ground against Trump than most Western leaders. Lula described U.S.-Brazil relations at a 200-year nadir after Trump tied the new tariff to his demand for an end to the prosecution of right-wing former President Jair Bolsonaro, who is standing trial for plotting to overturn the 2022 election. Brazil's Lula says he won't take orders from 'gringo' Trump The president said Brazil's Supreme Court, which is hearing the case against Bolsonaro, 'does not care what Trump says and it should not,' adding that Bolsonaro should face another trial for provoking Trump's intervention, calling the right-wing former president a 'traitor to the homeland.' 'We had already pardoned the U.S. intervention in the 1964 coup,' said Lula, who got his political start as a union leader protesting against the military government that followed. 'But this now is not a small intervention. It's the president of the United States thinking he can dictate rules for a sovereign country like Brazil. It's unacceptable.' Lula said his ministers were struggling to open talks with U.S. peers, so his government was focused on domestic measures to cushion the economic blow of U.S. tariffs, while maintaining 'fiscal responsibility.' He also said he was planning to call leaders from the BRICS group of developing nations, starting with India and China, to discuss the possibility of a joint response to U.S. tariffs. Lula also described plans to create a new national policy for Brazil's strategic mineral resources, treating them as a matter of 'national sovereignty' to break with a history of mining exports that added little value in Brazil.
