DXY Extends Losses to 6-Month Low
The US dollar index experienced a decline of over 1%, settling at 101.5 on Thursday, marking its lowest point in six months. This shift occurred due to softer inflation figures and a de-escalation in trade tensions. Notably, the Core Consumer Price Index (CPI) saw an increase of just 2.8% year-on-year, the slowest growth rate since March 2021. This data alleviated some concerns about the potential severe impact of ongoing trade tariffs on the US economy. Concurrently, President Trump announced a 90-day suspension on increased tariffs for most US trading partners, though China remains subject to a significant 125% rate. The United States continues to enforce a general 10% tariff, with specific exemptions for essential sectors such as semiconductors, pharmaceuticals, and energy, while automotive and metal industries still face a 25% tariff. Similarly, the European Union has also halted the introduction of new tariffs for 90 days to facilitate negotiations. Additionally, decreasing Treasury yields and the strengthening of safe-haven currencies such as the yen and Swiss franc are exerting additional pressure on the dollar.
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