The US dollar will register a weekly gain as the greenback benefits from trade and foreign policy progress. The buck has had a terrible first-half, cratering as much as 9% before paring a sizable share of its losses. Can the dollar stage a second-half comeback?
The US Dollar Index (DXY), a gauge of the greenback against a weighted basket of currencies like the Japanese yen and British pound, rose 0.27% to 101.15, from an opening of 100.77. The DXY will post a weekly gain of about 0.8% and is down 6.75% year-to-date.
Investors are ostensibly moving beyond economic headwinds generated from President Donald Trump’s tariffs now that the US administration is beginning to garner trade agreements.
To date, the most notable development was the 90-day tariff pause announced this past weekend between the world’s two largest economies.
But what happens now that the 90-day pause with the rest of the world is about halfway through? According to the president, White House officials will soon reach out to other countries and assign them updated tariff rates.
“So at a certain point over the next two to three weeks, I think Scott [Bessent] and Howard [Lutnick] will be sending letters out essentially telling people — and we’ll be very fair — but we’ll be telling people what they will be paying to do business in the United States,” Trump said during a roundtable meeting in the United Arab Emirates on Friday.
“I guess you could say they could appeal it, but for the most part, I think we’re going to be very fair. But it’s not possible to meet the number of people that want to see us.”
On the economic data front, the potential adverse tariff effects have yet to appear in the hard data.
The Bureau of Labor Statistics reported on Friday that April import and export prices rose at a modest 0.1%. On a year-over-year basis, they slowed to 0.1% and 2%, respectively.
Meanwhile, consumer sentiment continues deteriorating amid growing inflation worries. The University of Michigan’s May Consumer Sentiment Index cratered to the second-lowest level on record as one-year inflation expectations soared to 7.3%.
The US Treasury market was mixed, with little movement across yields. The benchmark ten-year yield fell 1.4 basis points to 4.441%. The two-year yield reached 3.98% and the 30-year eased to 4.9%.
The USD/CAD currency pair rose 0.24% to 1.3993, from an opening of 1.396, at 17:58 GMT on Friday. The EUR/USD dropped 0.37% to 1.1145, from an opening of 1.1191.