U.S. Dollar Strengthens Amid Trade Deals and Fiscal Woes
The U.S. dollar strengthened after a U.S.-Vietnam trade deal sparked optimism for more agreements before U.S. tariffs hit. The pound remained steady as UK fiscal concerns rose, while investors await U.S. payroll data to gauge the Fed's rate decisions. Concerns about tariffs and fiscal policy loom large.
The U.S. dollar gained ground on Thursday following a newly inked trade agreement between the United States and Vietnam, which has injected optimism about similar deals before the impending U.S. tariff deadlines on July 9. Analysts and investors are keeping a keen eye on upcoming payroll data to discern the Federal Reserve's next move regarding interest rates.
Amid fiscal concerns, Sterling stabilized after nearly losing 1% in the last trading session. This drop came after UK Prime Minister Keir Starmer backed Finance Minister Rachel Reeves in the midst of backlash, aiming to ease investor fears about Britain's financial health. Concurrently, the British government bond market experienced turmoil, further stirring fiscal unease in the UK.
On a broader scale, markets are responding to a significant U.S.-Vietnam trade deal which outlines that Vietnamese goods will be subjected to a 20% tariff while goods trans-shipped through Vietnam would incur a 40% levy. This move has implications for future trade negotiations, especially concerning China, and is a critical factor influencing currency markets globally.
(With inputs from agencies.)
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