While global equity markets have broadly recovered in the wake of the on-again, off-again saga of Trump’s tariff threats, the greenback remains firmly on its back. Factory and jobs data in the United States in the coming days may give further signs of the toll that trade uncertainty is wreaking on the world’s biggest economy.
U.S. duties on imported steel and aluminum are set to double to 50% starting on Wednesday, the same day the Trump administration expects countries to submit their best offers in trade negotiations.
“What this whole dynamic is basically saying is trade tensions are not really improving in that regard, and we’ve seen the dollar getting hammered widely,” said Rodrigo Catril, senior FX strategist at National Australia Bank. “Interestingly, the Aussie and the kiwi have been the good performers this time around.”
The dollar index, which measures the U.S. currency against six major peers, was little changed after touching 98.58, the lowest since late April, when it fell to a three-year trough. The greenback was at 142.71 yen, near a one-week low.
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The euro was barely changed at $1.1446 after briefly touching a six-week high of $1.1454. Later in the week, the focus will be on the European Central Bank’s interest rate decision and subsequent outlook. New Zealand’s kiwi dollar added 0.1% to $0.6045, a new high for the year. The Australian dollar was little changed at $0.64951. The dollar index sank 0.8% on Monday after data showed U.S. manufacturing contracted for a third month in May and tariff snarls meant suppliers took longer to deliver goods. Attention now turns to U.S. factory order numbers on Tuesday, along with jobs figures due later in the week.
The dollar got some respite last week, rising 0.3% after trade talks with the European Union got back on track and a U.S. trade court blocked the bulk of Trump’s tariffs.
An appeals court reinstated the duties a day later, and Trump’s administration said it had other avenues to implement them if it loses in court.
Fiscal worries have also given rise to a broad “sell America” theme that has seen dollar assets from stocks to Treasury bonds dropping in recent months.
Those concerns come into sharp focus this week as the Senate starts considering the administration’s tax cut and spending bill, estimated to add $3.8 trillion to the federal government’s $36.2 trillion in debt over the next decade.
