U.S. Dollar Strengthens Amid Inflation and Tariff Concerns
The U.S. dollar gained value alongside Treasury yields following a U.S. inflation report indicating tariff-related price increases. With the Fed hesitant to cut rates, the dollar surged against the yen and remained strong against other currencies. President Trump criticized Fed Chair Powell and hinted at future tariff actions.
The U.S. dollar climbed higher in tandem with Treasury yields on Wednesday, maintaining pressure on the yen, amidst a backdrop of President Donald Trump's tariffs influencing inflation rates. Notable price increases were seen in diverse goods such as coffee and home furnishings, elevating the inflation rate in June.
This uptrend drove the dollar and bond yields higher as investors downgraded their expectations of Federal Reserve rate cuts this year. The yen felt the impact significantly, dropping to a four-month low of 149.03 against the dollar, which later traded at 148.90 yen.
The euro and sterling also stagnated near three-week lows. Investment strategist Nathaniel Casey noted potential inflationary pressure from tariffs but cautioned against definitive conclusions. Despite this inflation report's lack of urgency, the uncertainty around future tariffs might make the Federal Reserve, led by Jerome Powell, reluctant to cut rates.
(With inputs from agencies.)
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