- The US dollar index is expected to be around 97.80 during Friday’s Asian trading session.
- On Thursday, Trump announced a 35% tariff on Canadian imports starting August 1.
- Initial US unemployment claims dropped to a seven-week low of 227K last week.
The US Dollar Index (DXY) reflects the value of the US dollar (USD) against a basket of six major currencies. It suggests a rise to approximately 97.80 in Asian trading hours, while other trading partners are considering imposing tariffs of either 15% or 20% on imports.
Late Thursday, Trump declared a 35% tariff on goods coming from Canada, set to take effect on August 1. He noted that this tariff is distinct from those affecting other sectors and that further adjustments could occur if Canada retaliates.
This letter to Canada follows Trump’s earlier warnings to his trading partners about new tariff rates on exports beginning August 1, should a trade agreement not be reached. He mentioned that the European Union would also receive a notice about new tariffs “today or tomorrow.”
“We’re committed to covering the tariffs for the entire country, whether it’s 20% or 15%,” Trump stated.
Additionally, on Wednesday, Trump revealed plans for tariffs on copper, semiconductors, and pharmaceuticals, with Brazil facing a 50% tariff rate.
The ongoing potential for inflation due to tariffs might persuade the U.S. Federal Reserve to delay interest rate cuts until next year. This situation could lend some support to the US dollar. Currently, the market anticipates a 50 basis point cut from the Fed by year-end, starting in October.
According to the U.S. Department of Labor (DOL), initial unemployment claims for the week ending July 5 fell to 227K from the previous week’s 233K, which was better than the expected 235K. This decline hints that employers may be holding onto their workers, indicating less urgency for the Federal Reserve to initiate interest rate cuts.
