The euro dropped to a three-week low early Monday while the U.S. dollar made modest gains, following President Donald Trump’s announcement of a potential 30% tariff on imports from the European Union and Mexico, set to take effect from August 1. The announcement was made via letters to EU Commission President Ursula von der Leyen and Mexican President Claudia Sheinbaum, which Trump posted on his Truth Social account.
Despite the tariff threats, financial markets showed restrained reactions. The euro slipped briefly but later regained some ground, last trading 0.13% lower at $1.1676. The dollar rose 0.28% against the Mexican peso to 18.6763, while sterling declined 0.15% to $1.3470. The Japanese yen strengthened marginally, trading at 147.31 per dollar.
Currency strategist Carol Kong of the Commonwealth Bank of Australia noted that markets appear increasingly desensitized to Trump’s frequent trade threats. “It seems like financial markets have become insensitive to President Trump’s tariff threats now, after so many of them in the past few months,” she said.
Bitcoin Hits Historic High
Amid this trade uncertainty, Bitcoin surged to a record high, crossing the $120,000 mark for the first time. It last traded 2.6% higher at $122,248.59, buoyed by optimism over potential regulatory wins for the crypto sector this week. Ether also rose, gaining 2% to $3,052.
Trump Targets Fed Again
In another headline-grabbing move, Trump said on Sunday it would be a “great thing” if Federal Reserve Chair Jerome Powell stepped down. He repeated his call for lower interest rates, threatening the independence of the central bank.
Markets are currently pricing in over 50 basis points of Fed rate cuts by December, with key U.S. inflation data due on Tuesday likely to shape those expectations.
Mixed Data from Asia
In China, new data on Monday showed exports and imports rebounded in June, as businesses rushed shipments amid a temporary trade truce with the U.S. Still, the Chinese yuan remained relatively stable, with the onshore unit at 7.1706 and the offshore at 7.1710 per dollar.
Investors are now awaiting China’s GDP data, set to be released Tuesday, for deeper insights into the world’s second-largest economy. Growth is expected to have slowed in Q2 amid rising U.S.-China trade tensions and ongoing deflationary pressures.
Meanwhile, other major currencies showed slight movements:
- Australian dollar slipped 0.12% to $0.6566
- New Zealand dollar fell 0.37% to $0.5987
As global markets tread cautiously, investors remain focused on tariff developments, upcoming inflation data, and macroeconomic indicators from China to assess the path ahead.