Dollar Dips Amid Trade Uncertainties and Fed Rate Speculations

The dollar experienced a decline on Thursday, as market expectations for Federal Reserve rate cuts intensified alongside persisting trade uncertainties. President Donald Trump signaled a potential extension of the July 8 deadline for trade talks, contributing to market unease. These developments followed remarks from U.S. Treasury Secretary Scott Bessent, suggesting extensions for cooperative countries.

The impact of these uncertainties was felt across global markets, with investors opting to sell off dollars en masse. Meanwhile, the euro surged to a seven-week peak, although it pulled back slightly, trading at $1.1513. Elsewhere, the yen climbed 0.4% to 143.95 per dollar, reflecting the dollar's broad decline.

U.S. Treasury yields dropped on Wednesday, offering limited pressure on the Fed to sustain high interest rates. Markets are currently pricing in two Fed rate reductions of 25 basis points each by year-end. Analysts remain prudent regarding inflation ahead of new producer price index data, with forecasts suggesting core PCE inflation could strengthen, driven by recent tariff measures.

(With inputs from agencies.)