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The US dollar steadied on Wednesday after three days of losses, as markets assessed the newly announced trade agreement with Japan.
President Trump confirmed a 15% tariff on Japanese exports, lower than the previously feared 25%, while also securing a USD 550 billion investment pledge and broader access for US goods.
The deal offered some relief, helping to offset concerns ahead of the looming August 1 deadline for other countries to finalize trade terms with Washington.
Despite the improved sentiment, investors remain wary. The extension of the tariff truce with other countries is still uncertain, and fears of renewed escalation continue to weigh on the greenback’s broader outlook. Political pressure on the Federal Reserve and lingering doubts about its independence also contribute to the uncertainty.
Meanwhile, US Treasury yields moved higher today across the curve as investors could move toward riskier assets. Risk appetite could be fueled by positive developments around trade negotiations and could weigh on bonds. In this regard, yields could react to any developments or setbacks in trade negotiations.
Looking ahead, investors await key US data on Thursday, including PMI preliminary figures and jobless claims, which could provide clear indications on US economic momentum. While weak data could weigh on the dollar, strong results could boost the currency.
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