USD: Still little affected by tariff news - ING

The FX market continues to approach tariff headlines with caution, broadly subscribing to the view that Trump is using the upcoming deadlines as leverage for trade negotiations but is unlikely to maintain elevated reciprocal tariffs for long. The US Dollar (USD) has struggled to find clear direction as a result, with the Fed narrative remaining the dominant driver for FX. While tariff decisions have influenced the Fed, markets are now more focused on incoming data, given the volatility and unpredictability of US trade policy, ING's FX analyst Francesco Pesole notes.

Trump is set to announce trade updates

"Until we receive some key data input the dollar may not deviate too far from current levels. That is unless markets find anything remarkable in the June FOMC minutes released this evening. The consensus expectation is probably that two members, Bowman and Waller, will have flagged their dissent at the meeting before delivering dovish comments to the media a few days later. But if the minutes show a greater dovish front, then the dollar could take a hit as the bar for data to justify a summer cut would be lower."

"Barring any major surprises, we think tariff developments (Trump is set to announce trade updates on at least seven countries today) are more likely to drive relative performance among currencies with similar risk exposure but differing sensitivity to US tariffs, rather than materially shifting the dollar itself. This dynamic is particularly evident in Asia."

"The yen, for example, remains under pressure from Trump's trade rhetoric towards Japan - and the consequences for public finances ahead of the upcoming election. Instead, the Philippine peso could benefit from flows diverted away from other Asian markets affected by higher reciprocal tariffs. The spike in Copper prices overnight can also leave longer-lasting effects on Copper-exporting countries."