The US Greenback (USD) is buying and selling slightly extra defensively total this morning as markets digest the newest spherical of US tariff information—a hefty 50% on copper and 50% on Brazil, Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret report.
USD edges decrease alongside US shares and bonds
“Deadlines are tight (August 1), leaving little room for off-ramps to be situated and whereas markets could perceive that these announcement are simply gambits in additional prolonged commerce negotiations, the persistence with tariff motion could also be carrying on investor endurance. World shares are combined and main bond markets are slightly softer however there’s a average ‘promote America’ vibe to cost motion once more at present—the USD is weaker alongside average losses for US fairness futures and Treasurys.”
“UK shares and bonds are outperforming their friends though the GBP is a middling performer among the many G10 currencies. The USD’s broader July rebound is displaying indicators of faltering, with the DXY struggling to carry positive factors above the mid-97 zone which is about the place we anticipated the early July bounce may meet resistance. FOMC minutes launched yesterday mirrored the break up opinions amongst policymakers that we’re all accustomed to. Two officers have been open to a July lower, ‘most’ anticipated decrease rates of interest this 12 months and ‘some’ noticed no easing in any respect in 2025.”
“Inflationary dangers from tariffs stay a priority however there may be little readability on when or for a way lengthy the influence will likely be felt. September FOMC pricing remains to be solely a bit higher than a coin toss however swaps proceed to anticipate 50bps of cuts by December. The US releases weekly claims knowledge at 8.30ET whereas Musalem (voter) and Daly (non-voter) are each speaking on the financial outlook. The Treasury auctions USD22bn in 30Y bonds (outcomes at 13ET). On the charts, the DXY, has slipped again to the decrease finish of the short-term bull channel (97.3) that developed across the flip of the month. A break decrease could sign the resumption of broader strain on the USD forward.”
