FX.co ★ Dollar Index Extends Rebound

The dollar index climbed to 97.7 on Tuesday, continuing its recovery after hitting a more than three-year low of 96.8 on July 2nd. This movement came as markets evaluated the effects of the new tariffs imposed by President Trump on capital flows and the future direction of fiscal and monetary policy. President Trump has implemented substantial tariffs on major Asian trading partners: a 25% levy on Japan and Korea, alongside targeted tariffs on the automotive and metals sectors which significantly affect both economies, set to take effect on August 1st. The President also hinted at the possibility of further tariffs against nations that retaliate against these measures or engage in what he describes as "anti-American policies of BRICS." The dollar's most notable appreciation was against the yen, driven by reduced foreign exchange demand in Japan following the new tariffs. Additionally, expectations of a Federal Reserve rate cut this month were largely diminished after the release of a robust jobs report last week.