U.S. Dollar Gains Amid Inflation and Tariff Tensions

The U.S. dollar found support from increased Treasury yields on Wednesday as inflation figures indicated that President Donald Trump's tariffs might be impacting prices. U.S. inflation climbed in June, driven by price hikes on imported goods like coffee and home furnishings, impacting the dollar and boosting bond yields.

The greenback surged against the yen to a 3-1/2-month peak of 149.19 before slightly retracting to 148.91 yen. The euro and sterling remained near three-week lows, with the former at $1.1616 and the latter at $1.3395. Nathaniel Casey of Evelyn Partners noted emerging inflationary pressures from tariffs, though it remains too early for a definitive assessment.

Investors' expectations for Fed rate cuts this year moderated, with forecasts now predicting around 43 basis points by December. Key focus turns to upcoming U.S. producer price data. Treasury yields rose, impacting the economic landscape, while international trade agreements signal potential shifts in tariff policies.

(With inputs from agencies.)