The dollar index (DXY00) today is down by -0.67% at a 1-1/4 month low. Escalation of US-China trade tensions has led to a selloff of the US dollar after China accused the US of violating their recent trade deal by unilaterally introducing new discriminatory restrictions. Also, dovish comments from Fed Governor Waller weighed on the dollar when he said he sees a path to Fed interest rate cuts later this year. Losses in the dollar accelerated after today's US economic news showed the May ISM manufacturing index and Apr construction spending unexpectedly declined.
Escalating trade tensions between the US and China have eroded confidence in the dollar. China's Ministry of Commerce today accused the US of unilaterally introducing new discriminatory restrictions, including new guidelines on AI chip export controls, curbs on chip design software sales to China, and the revocation of Chinese student visas, and vowed to take measures to defend its interests. The latest flare-up threatens to worsen trade relations even after President Trump expressed hope he will speak with Chinese President Xi Jinping this week to accelerate a trade truce.
