The US Dollar Index (DXY), which tracks the performance of the greenback against a basket of six major currencies, is holding firm around 97.20 during Thursday’s European session. This comes after four consecutive days of losses, as markets await fresh cues from the upcoming S&P Global US Purchasing Managers Index (PMI) data for July.
The Dollar appears to be finding some support as concerns surrounding the Federal Reserve’s independence begin to ease. US Treasury Secretary Scott Bessent commented late Wednesday that a new nominee to replace current Fed Chair Jerome Powell may be announced by December or January, but emphasized there is “no rush” to make the selection. With the next Fed meeting on the horizon, investors widely expect interest rates to remain unchanged, while potential rate cuts are being eyed for October.
Tariff Talk Boosts Uncertainty and Dollar Caution
US President Donald Trump made headlines at an AI summit in Washington on Thursday, signaling the launch of a new tariff regime. He stated that tariffs would begin at a baseline of 15%, potentially reaching up to 50%, depending on the trading partner. This marks a significant shift toward a broader and more aggressive tariff strategy, with only a handful of countries with pre-existing trade deals likely to be exempt.
Meanwhile, the US and the European Union are reportedly nearing a deal that would include a 15% tariff on EU goods entering the US, according to the Financial Times. Earlier this week, Trump also announced a trade agreement with Japan featuring a similar 15% tariff on Japanese exports.
Despite some progress, uncertainty lingers. Countries like South Korea and India remain in negotiations, with looming threats of higher tariffs if no deals are reached. Markets are also awaiting updates on US-China trade talks, with Secretary Bessent expected to meet Chinese officials in the coming week for a third round of discussions.
Market Focus: PMI Data and Fed Signals
Traders are closely watching Thursday’s release of the S&P Global US PMI figures, which are expected to provide a clearer picture of the US economic outlook and influence short-term Dollar momentum. With interest rate decisions and geopolitical developments still in play, the greenback’s path remains sensitive to both economic data and international policy signals.
