Tariff Escalation Strengthens the Dollar, Pressures the Euro
U.S. President renewed his threat to impose 30% tariffs on imports from the European Union and Mexico starting August 1, 2025. This caused the euro to fall to $1.1676 and pushed the U.S. Dollar Index up to 98.10. The EU called the move “unfair,” while Moscow described it as a “negotiation tactic.” Meanwhile, the European Stoxx 600 Index declined by 0.9%, and Germany’s DAX dropped 1.2% amid pressure on export-related stocks.
Markets Await U.S. CPI Data and Its Impact on Interest Rates
Investor focus is now on the U.S. CPI report for June, due tomorrow. Expectations point to a monthly rise of 0.3% and an annual increase of 2.6%. Analysts at Wells Fargo warn that a reading above 2.8% could boost the likelihood of another rate hike, especially with the 10-year Treasury yield hovering at 4.38%. Markets are also eyeing PPI data and jobless claims, which are expected to introduce additional volatility midweek.
Safe-Haven Assets React Amid Rising Tensions
Amid heightened political and economic tensions, gold surged to $3,340 per ounce, gaining around 0.7%, while the USD/JPY pair climbed to 147.31 before trimming gains slightly. Asian stock markets also faced pressure, with Japan’s Nikkei down 1.3% and Gulf markets incurring losses due to investor risk aversion. Experts at Oxford Economics note that the combination of trade risks and key economic data this week may reshape interest rate expectations and capital flows across currency and commodity markets.
