- DXY turns below 99.50, which is a 1.8% decrease in a week among wide risk moods.
- Trump threatens 50% of EU tariffs, 25% on Apple products produced abroad.
- Markets are looking at the upcoming minutes of FOMC, GDP and basic PCE data for principles signals.
American dollar index (DXY), which follows the value of the American dollar (USD) in relation to the basket of six main currencies, rapid declines on Friday, which accounts for over 1.8% during the week after on Thursday published a miniature profit to mention about 99.10 near the minimum two -week minimum, before the weekend.
Although the American dollar has already faced the persistence of commercial tensions and the growing fears of the US fiscal forecast, the renovated weakness on Friday appears in response to the aggressive trade rhetoric of the US President Donald Trump, because he threatened that he would impose 50% of tariffs to all goods sent to the United States from the European Union (EU), at least 25%, and at least 25%, and at least 25% Secret “at least for apple products. Threats aroused fears of the growing trade war and added to the mood at risk in global markets.
Threats in the form of social media posts took place a few hours before the planning of commercial talks at a high level between Washington and Brussels. Trump initially imposed a 20% tariff on most EU goods last month, but temporarily reduced by half a fee to 10% to July 8 to ensure a place for negotiations.
“Our discussions with them are not going anywhere!” Trump wrote in a post on social media on Friday. He said that the new tariffs would start on June 1.
This aggressive attitude is expected to reduce 20% of the EU exports to the USA, in accordance with the estimates of Kiel Institute.
Looking to the future, market participants will focus on the comments from Fed Officials, as well as minutes of FOMC meetings, preliminary Q1 GDPBasic PCE price index, personal income and expenditure, orders for fixed goods and a balance of trade in goods, all next week, for fresh tips on US economic perspectives and the direction of monetary policy.
The price of the American dollar today
The table below shows a percentage change in the US dollar (USD) compared to the main vital currencies. The American dollar was the strongest in relation to the euro.
| USD | EUR | GBP | JPy | BOOR | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.70% | -0.84% | -1.04% | -0.98% | -1.32% | -1.48% | -0.98% | |
| EUR | 0.70% | -0.14% | -0.36% | -0.28% | -0.61% | -0.77% | -0.26% | |
| GBP | 0.84% | 0.14% | -0.19% | -0.13% | -0.44% | -0.63% | -0.12% | |
| JPy | 1.04% | 0.36% | 0.19% | 0.08% | -0.28% | -0.44% | 0.08% | |
| BOOR | 0.98% | 0.28% | 0.13% | -0.08% | -0.36% | -0.49% | 0.01% | |
| Aud | 1.32% | 0.61% | 0.44% | 0.28% | 0.36% | -0.15% | 0.36% | |
| NZD | 1.48% | 0.77% | 0.63% | 0.44% | 0.49% | 0.15% | 0.51% | |
| CHF | 0.98% | 0.26% | 0.12% | -0.08% | -0.01% | -0.36% | -0.51% |
The heat map shows percentage changes in the main currencies towards each other. The basic currency is collected from the left, and the quote currency is collected from the upper order. For example, if you choose an American dollar on the left column and move along the horizontal line to Japanese Jen, the percentage shift displayed in the field will represent USD (base)/JPy (quote).
FAQ in American dollars
The American dollar (USD) is the official currency of the United States of America and the “de facto” currency of a significant number of other countries where it is in circulation with local notes. It is most often a commercial currency in the world, which is over 88% of all global currency turnover, i.e. an average of $ 6.6 trillion of transactions per day, according to the data from 2022. After the Second World War, USD took over from the British pound as the reserve currency of the world. For most of its history, the American dollar was supported by gold, up to the Bretton Woods agreement in 1971, when the golden standard disappeared.
The most vital single factor affecting the value of the American dollar is the monetary policy, which is shaped by the Federal Reserve (FED). The Fed has two seats: achieving price stability (control inflation) and supporting full employment. Its main tool to achieve these two goals is to adjust interest rates. When the prices rise too quickly and inflation is above 2% of the Fed target, the FED will augment the rates, which helps USD values. When inflation drops below 2% or the unemployment rate is too high, the Fed may reduce interest rates that are weighing in the green area.
In extreme situations, the Federal Reserve can also print more dollars and introduce quantitative alleviation (QE). QE is a process in which the Fed significantly increases the credit flow in the detained financial system. It is a non -standard policy measure used in the event of a loan arid, because the banks will not borrow (for fear of the contractor). This is the last last resort, when simply lowering interest rates is unlikely to achieve the necessary result. The weapon of choosing the Fed was a FED weapon to combat the credit crisis, which took place during the great financial crisis in 2008. This includes FED printing more dollars and using them to buy US government bonds mainly from financial institutions. QE usually leads to a weaker American dollar.
Quantitative twist (QT) is the opposite process in which the federal reserve stops buying bonds from financial institutions and will not reinvest from the bonds that it has in up-to-date purchases. This is usually positive for the American dollar.
