The recent comments made by President Donald Trump have led to a further decline of the US dollar. Following his statements regarding tariffs, the greenback slid by 0.3 percentage points against a basket of currencies (Dollar Index). Trump indicated that he would inform America’s trade partners about unilateral tariffs before the July deadline. “We’ll be sending letters in about a week and a half to two weeks to countries,” he remarked to reporters at the John F. Kennedy Center for the Performing Arts in Washington, where he was attending a performance. “We will state: this is the offer, take it or leave it.”
The billionaire’s remarks have intensified downward pressure on the US dollar, which is now trading at its lowest level since July 2023. Furthermore, data released yesterday regarding US inflation did not bolster the American currency. The consumer price index rose by 2.4% year-over-year, which was below the analysts’ forecast of 2.5%, as the market anticipates fewer interest rate cuts by the Federal Reserve. “The US inflation numbers reinforce a negative outlook for the dollar, especially as tensions in the Middle East have failed to trigger a rebound in the American currency, typically viewed as a safe haven during geopolitical strife,” commented Alex Loo, macro strategist at TD Securities in Singapore.
US Dollar: Focus on Today’s Inflation Data
This afternoon, data regarding producer prices in the United States will be released. This reading holds significance as certain components of the Producer Price Index (PPI) feed into the core personal consumption expenditures, a key measure for the Federal Reserve’s monetary policy strategy. This announcement could impact the dollar’s trajectory in the coming days.
Mark Cranfield, an analyst with Bloomberg in Singapore, believes that the market still leans towards the potential for further rate cuts from the Fed, although the timing may shift depending on the prevailing sentiment among investors. What remains certain is the bearish sentiment surrounding the US dollar, with “the convictions among Forex traders being strongly in favor of this outlook.”
In this context, the upcoming G7 summit will be crucial, as it may lead to advancements in trade discussions. Loo from TD Securities noted that “leaks from negotiations might boost the positive sentiment towards other currencies, such as the Canadian dollar and the Mexican peso.”
