The US dollar surged to its highest level in over a week as President Donald Trump began rolling out his proposals for trade tariffs. The source reports that the dollar appreciated by 0.6% against a basket of major currencies during afternoon trading in New York. This uptick followed Trump’s announcement of imposing 25% tariffs on goods from Japan and South Korea, causing a notable decline in the yen and the won by more than 1% each.
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Market analysts, including Ning Sun from State Street Global Markets, noted that the tariffs have dampened sentiment towards risky assets. The US is actively reaching out to trading partners ahead of a Wednesday deadline to finalize deals, though Treasury Secretary Scott Bessent clarified that these are not the final rates, with tariffs set to take effect on August 1. Despite these developments, the dollar remains nearly 9% down for the year.
According to IndexBox data, the recent robust US payroll numbers have bolstered the dollar, reducing the likelihood of Federal Reserve rate cuts. Traders are now anticipating around 51 basis points of easing by year-end, a decrease from 65 basis points projected a week ago. The yen dropped by as much as 1.2% to 146.15 per US dollar, marking its weakest level in nearly two weeks, while the South Korean won fell about 1.1% to 1378 per dollar.
The broader impact of Trump’s tariff strategy is also being felt globally, with the MSCI emerging-market currency index declining by 0.5%. South Africa’s rand, India’s rupee, Brazil’s real, and China’s offshore yuan all experienced drops. Trump’s rhetoric suggests that countries aligning with BRICS policies could face additional tariffs, potentially ranging from 10% to 70%.
