Euro eases after Trump threatens 30% tariffs on EU
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The euro fell to a three-week low on Monday while the Mexican peso also came under pressure after President Donald Trump threatened to impose a 30% tariff on imports from two of the largest U.S. trading partners beginning August 1.Trump on Saturday announced the latest tariffs in separate letters to European Commission President Ursula von der Leyen and Mexican President Claudia Sheinbaum that were posted on his Truth Social media site.Both the European Union and Mexico described the tariffs unfair and disruptive, while the E.U. said it would extend its suspension of countermeasures to U.S. tariffs until early August and continue to press for a negotiated settlement.Reaction in the currency market to Trump's latest tariff threats was largely muted in the early Asian session, though the euro did slip to a roughly three-week low and last traded 0.15% lower at $1.1675.Against the Mexican peso, the dollar rose 0.2% to 18.6630.Elsewhere, however, the dollar made limited gains, with sterling down just 0.04% to $1.3485, while the Japanese yen rose 0.1% to 147.27 per dollar.Investors have grown increasingly desensitised to Trump's slew of tariff threats, with his latest upheaval in the global trade landscape doing little to prevent U.S. stocks from scaling record highs and offering just a slight boost to the dollar."It is hard to say whether the muted market response over the week is best characterised by resilience or complacency," said Taylor Nugent, senior economist at National Australia Bank."But it is difficult to price the array of headlines purportedly defining where tariffs will sit from August 1 when negotiations are ongoing and the key substantive development recently is that the earlier July 9 reciprocal tariff deadline came and went without an increase in tariff rates."In other currencies, the Australian dollar ticked up 0.02% to $0.6575, while the New Zealand dollar fell 0.07% to $0.6004.Outside of tariff news, Trump on Sunday said that it would be a great thing if Federal Reserve Chair Jerome Powell stepped down, again threatening to undermine the central bank's independence as he calls for interest rates to be lowered.Traders could get a better clue on the future path for U.S. rates when inflation data for June comes due on Tuesday, where expectations are for U.S. consumer prices to have picked up slightly last month.Markets are currently pricing in just over 50 basis points worth of Fed easing by December.Also on investors' radars will be the release of Chinese gross domestic product figures similarly out on Tuesday.The world's second-largest economy is expected to have slowed down in the second quarter from a solid start to the year as trade tensions with the United States added to deflationary pressures.
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