logo
Dollar indecisive as investors await more tariff clarity

Dollar indecisive as investors await more tariff clarity

Reuters4 days ago
SINGAPORE, July 22 (Reuters) - The dollar traded in a tight range on Tuesday after a brief fall at the start of the week, as investors watched out for any progress on trade talks ahead of an August 1 deadline for countries to strike deals with the U.S. or face steep tariffs.
The yen mostly held to gains from the previous session following results from a weekend upper house election in Japan that proved no worse than what had already been priced in, as focus now turns to how quickly Tokyo can strike a trade deal with Washington and Prime Minister Shigeru Ishiba's future at the helm.
The Japanese currency was last a touch weaker at 147.65 in early Asia trade, after rising 1% on Monday in the wake of the election outcome.
The bruising defeat suffered by Ishiba and his ruling coalition also drew just a modest response in the broader Japanese market, which returned from a holiday in the previous session.
"The initial relief for the yen that the ruling coalition did not lose even more seats and that Prime Minister Ishiba plans to hang on to power is likely to prove short-lived," said MUFG senior currency analyst Lee Hardman.
"The pick-up in political uncertainty in Japan could complicate reaching a timely trade deal with the U.S., posing downside risks for Japan's economy and the yen."
With just slightly over a week to go before an August 1 deadline on tariffs, U.S. Treasury Secretary Scott Bessent said on Monday that the administration is more concerned with the quality of trade agreements than their timing.
Asked whether the deadline could be extended for countries engaged in productive talks with Washington, Bessent said President Donald Trump would make that decision.
Uncertainty over the eventual state of tariffs globally has been a huge overhang for the foreign exchange market, leaving currencies trading in a tight range for the most part, even as stocks on Wall Street have scaled fresh highs.
"Nothing that happens on August 1 is necessarily permanent, so long as the U.S. administration remains willing to talk, as was indicated in Trump's letters from two weeks ago," said Thierry Wizman, global FX and rates strategist at Macquarie Group.
The dollar was last steady after slipping in the previous session due in part to the yen's rise and a dip in U.S. Treasury yields, leaving sterling trading 0.03% lower at $1.3488.
The euro fell 0.12% to $1.1684, with focus also on a rate decision by the European Central Bank later this week, where expectations are for policymakers to stand pat on rates.
The European Union is exploring a broader set of possible counter measures against the United States as prospects for an acceptable trade agreement with Washington fade, according to EU diplomats.
Against a basket of currencies, the dollar rose slightly to 97.94, after having fallen 0.6% on Monday.
Also weighing on investors' minds has been worries about the Federal Reserve's independence, given Trump has railed repeatedly against Chair Jerome Powell and urged him to resign because of the central bank's reluctance to cut interest rates.
"Our base case remains that solid U.S. data and a tariff driven rebound in inflation will keep the FOMC on hold into 2026, and that the resulting shift in interest rate differentials will drive a continued rebound in the dollar in the next few months," said Jonas Goltermann, deputy chief markets economist at Capital Economics.
"But that view is clearly at the mercy of the White House's whims."
Elsewhere, the Australian dollar eased 0.05% to $0.6522, while the New Zealand dollar fell 0.14% to $0.5960.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

US dollar rises, but on track for weekly drop ahead of Fed, BOJ
US dollar rises, but on track for weekly drop ahead of Fed, BOJ

Reuters

time28 minutes ago

  • Reuters

US dollar rises, but on track for weekly drop ahead of Fed, BOJ

NEW YORK, July 25 (Reuters) - The U.S. dollar advanced on Friday, bolstered by solid economic data that suggested the Federal Reserve could take its time in resuming interest rate cuts, while tariff negotiations showed more clarity that eased some uncertainty in the market. The U.S. currency showed little reaction to data showing new orders for key U.S.-manufactured capital goods unexpectedly fell in June while shipments of those products increased moderately. That suggested business spending on equipment slowed considerably in the second quarter. "The dollar regained some ground the past two days, after being on the defensive earlier in the week ... supported mostly by an encouraging set of U.S. economic data that argues for continued patience at the Fed," said Elias Haddad, senior markets strategist at Brown Brothers Harriman in London. The greenback was set for its biggest weekly drop in a month, ahead of more tariff dialogue and central bank meetings next week, while sterling dipped after softer-than-expected British retail sales data. Both the Fed and the Bank of Japan are expected to hold rates steady at next week's policy meetings, but traders are focusing on the subsequent comments to gauge the timing of the next moves. "We see some room for optimism at the (Fed) meeting," wrote BNP Paribas in a research note. "Economic uncertainty associated with trade policy, while not entirely resolved, has declined markedly." Politics is a factor for both central banks, most dramatically in the U.S., where President Donald Trump once again pressed for lower interest rates on Thursday as he locked horns with Fed Chair Jerome Powell. Brown Brothers' Haddad said the Fed's monetary policy is being "overshadowed by the political pressure to lower interest rates. That's one of the reasons why I think the dollar's upside is limited." The dollar managed to recover a touch against the euro late on Thursday, however, after Trump said he did not intend to fire Powell, as he has frequently suggested he could. "The market relief was based on the fact that Trump refrained from calling for Powell to go, although that was based on Trump's view that Powell would 'do the right thing'," said Derek Halpenny, head of EMEA research at MUFG. He added, however, that "the theme of Fed independence being undermined by the White House will unlikely go away and remains a downside risk for the dollar." Falls against the euro and yen leave the dollar index , which measures the dollar against six other currencies, at 97.45, on track for a drop of 0.8% this week, its weakest performance in a month, though it bounced back 0.2% to 97.663 on Friday. Meanwhile, in Japan, though the trade deal signed with the U.S. this week could make it easier for the BOJ to continue rate hikes, the bruising loss for Prime Minister Shigeru Ishiba's coalition in upper house elections on Sunday complicates life for the BOJ. The yen was softer, thanks in part to below-expectations Tokyo inflation data, with the dollar last up 0.4% at 147.59 yen, though on course for a weekly 0.9% fall , the lowest since June 23. The euro was flat at $1.1741 , but set for a weekly gain of nearly 1%, its best showing in a month. The common currency took some support Thursday from the European Central Bank meeting. Policymakers left the policy rate at 2%, as expected, but the bank's relatively upbeat assessment of the economic outlook and signs that an EU-U.S. trade deal is near caused investors to reassess previous assumptions of one more rate cut this year. In contrast, soft British data is supporting expectations of more Bank of England rate cuts, and causing euro zone bond yields to rise faster than British ones, supporting the euro against the pound. The euro rose to 87.43 pence versus sterling on Friday, its highest since April, building on a 0.44% gain the previous day. . It was last up 0.4% at 87.42 pence. Data on Friday showed British retail sales data for June came in slightly below analysts' expectations, albeit rebounding from a sharp drop in May. Figures on Thursday showed business activity grew only weakly in July and employers cut jobs at the fastest pace in five months. Against the dollar, the pound fell 0.6% to $1.3434 .

S&P 500, Nasdaq close at records; Deckers soars on UGG demand
S&P 500, Nasdaq close at records; Deckers soars on UGG demand

Reuters

time28 minutes ago

  • Reuters

S&P 500, Nasdaq close at records; Deckers soars on UGG demand

July 25 (Reuters) - The S&P 500 and Nasdaq notched record high closes on Friday, lifted by optimism the U.S. could soon reach a trade deal with the European Union, while Deckers Outdoor surged following a strong quarter for the maker of UGG boots and Hoka sneakers. European Commission President Ursula von der Leyen will meet U.S. President Donald Trump on Sunday in Scotland after EU officials and diplomats said they expected to reach a framework trade deal this weekend. Trump said earlier that the odds of a U.S.-EU trade deal were "50-50". Deckers Outdoor (DECK.N), opens new tab soared 11% after results beat quarterly estimates, with strong demand in international markets. Intel (INTC.O), opens new tab tumbled 8.5% after the chipmaker forecast steeper quarterly losses than expected and announced plans to slash jobs. Wall Street has surged to record highs in recent weeks, thanks to upbeat quarterly earnings, trade deals with Japan and the Philippines, and expectations that the White House will cement more agreements to avoid elevated tariffs threatened by Trump. "The market has been anticipating that the deals are going to get done," said Thomas Martin, Senior Portfolio Manager at GLOBALT in Atlanta. "Personally, I have a bit more skepticism. You've got to be careful, because if they don't get done, there is more room for disappointment than there is upside." The S&P 500 climbed 0.40% to end the session at 6,388.64 points. The Nasdaq gained 0.24% to 21,108.32 points, while the Dow Jones Industrial Average rose 0.47% to 44,901.92 points. Nine of the 11 S&P 500 sector indexes rose, led by materials (.SPLRCM), opens new tab, up 1.17%, followed by a 0.98% gain in industrials (.SPLRCI), opens new tab. For the week, the S&P 500 climbed 1.5%, the Nasdaq added 1% and the Dow rose 1.3%. The S&P 500 set a closing record every day this week. The last time the index had a "perfect week" of closing highs, Monday through Friday, was in November 2021, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. Investors next week will focus on the U.S. Federal Reserve, with policymakers on Thursday expected to hold interest rates steady as the central bank weighs the impact of tariffs on inflation. Traders see about a 60% chance of a rate cut in September, according to CME's FedWatch tool. Trump said on Friday he believed that Fed Chair Jerome Powell might be ready to lower rates. Trump made a to the Fed on Thursday after calling earlier in the week for failing to slash rates. Charter Communications (CHTR.O), opens new tab slumped 18% after the cable giant reported a deeper-than-expected broadband subscriber loss, hurt by competition from wireless carriers bundling high-speed internet services with 5G mobile plans. Paramount Global (PARA.O), opens new tab dipped 1.6% after U.S. regulators approved its $8.4-billion merger with Skydance Media. Health insurer Centene (CNC.N), opens new tab rose 6.1% after it said it expects to deliver improved profitability in its three government-backed healthcare insurance businesses in 2026. S&P 500 companies are expected on average to increase their second-quarter earnings by 7.7% year over year, according to LSEG I/B/E/S, with most of those gains coming from heavyweight tech-related companies. Companies reporting next week include Microsoft (MSFT.O), opens new tab, Apple (AAPL.O), opens new tab, Amazon (AMZN.O), opens new tab and Meta Platforms (META.O), opens new tab. Advancing issues outnumbered falling ones within the S&P 500 (. opens new tab by a two-to-one ratio. The S&P 500 posted 45 new highs and 6 new lows; the Nasdaq recorded 68 new highs and 54 new lows. Volume on U.S. exchanges was relatively light, with 17.7 billion shares traded, compared to an average of 18.1 billion shares over the previous 20 sessions.

S&P 500 and Nasdaq hit records; Deckers soars on UGG demand
S&P 500 and Nasdaq hit records; Deckers soars on UGG demand

Reuters

time28 minutes ago

  • Reuters

S&P 500 and Nasdaq hit records; Deckers soars on UGG demand

July 25 (Reuters) - The S&P 500 and Nasdaq notched record high closes on Friday, lifted by optimism the U.S. could soon reach a trade deal with the European Union, while Deckers Outdoor surged following a strong quarter for the maker of UGG boots and Hoka sneakers. European Commission President Ursula von der Leyen will meet U.S. President Donald Trump on Sunday in Scotland after EU officials and diplomats said they expected to reach a framework trade deal this weekend. Trump said earlier that the odds of a U.S.-EU trade deal were "50-50". Deckers Outdoor (DECK.N), opens new tab soared after results beat quarterly estimates, with strong demand in international markets. Intel (INTC.O), opens new tab tumbled after the chipmaker forecast steeper quarterly losses than expected and announced plans to slash jobs. Wall Street has surged to record highs in recent weeks, thanks to upbeat quarterly earnings, trade deals with Japan and the Philippines, and expectations that the White House will cement more agreements to avoid elevated tariffs threatened by Trump. "The market has been anticipating that the deals are going to get done," said Thomas Martin, Senior Portfolio Manager at GLOBALT in Atlanta. "Personally, I have a bit more skepticism. You've got to be careful, because if they don't get done, there is more room for disappointment than there is upside." According to preliminary data, the S&P 500 (.SPX), opens new tab gained 26.73 points, or 0.42%, to end at 6,390.08 points, while the Nasdaq Composite (.IXIC), opens new tab gained 53.95 points, or 0.26%, to 21,111.90. The Dow Jones Industrial Average (.DJI), opens new tab rose 213.74 points, or 0.48%, to 44,907.65. The S&P 500 set a closing record every day this week. The last time the index had a "perfect week" of closing highs, Monday through Friday, was in November 2021, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. Investors next week will focus on the U.S. Federal Reserve, with policymakers on Thursday expected to hold interest rates steady as the central bank weighs the impact of tariffs on inflation. Traders see about a 60% chance of a rate cut in September, according to CME's FedWatch tool. Trump said on Friday he believed that Fed Chair Jerome Powell might be ready to lower rates. Trump made a to the Fed on Thursday after calling earlier in the week for failing to slash rates. Paramount Global (PARA.O), opens new tab dipped after U.S. regulators approved its $8.4-billion merger with Skydance Media. Health insurer Centene (CNC.N), opens new tab rose after it said it expects to deliver improved profitability in its three government-backed healthcare insurance businesses in 2026.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store