U.S. Dollar Declines 0.4% as Euro Gains 0.7% Amid Tariff Talks

The U.S. dollar has experienced a fourth consecutive day of decline, with the euro leading the gains among G-10 currencies. The Swiss franc, however, saw its gains narrow as Switzerland's efforts to persuade the U.S. to lower tariffs on its goods appeared to have failed. The Swiss Federal Council, led by the Federal President, had rushed to Washington for negotiations but left without securing a better deal on tariffs, which currently stand at 39%.

The Bloomberg Dollar Index fell by 0.4%, marking its largest decline since August 1. Market analysts attributed the drop to a lack of significant economic data and the dominance of news headlines. The primary risk to the dollar was seen as coming from within the U.S. itself, leading to its weakening position. Market participants are awaiting the announcement of the successor to Federal Reserve Governor Adriana Kugler by President Trump. Additionally, the U.S. is set to implement retaliatory tariffs on numerous trading partners starting Thursday.

Federal Reserve Governor Lisa Cook expressed concern over the July employment report, suggesting it could signal a turning point in the U.S. economy. ING has moved up its expectation for a Fed rate cut from December to September, citing the recent employment report as a warning sign. However, Monex Europe maintains that the Fed will keep interest rates unchanged for the rest of the year.

The dollar's decline against the Swiss franc was modest, falling 0.1% to 0.8067, with intraday lows reaching 0.3%. Insiders revealed that the Swiss delegation, led by the Federal President, presented a new proposal to U.S. officials but did not expect to secure a better tariff agreement before leaving Washington.

The New Zealand dollar appreciated by 0.5% against the U.S. dollar, reaching 0.5935. The second-quarter unemployment rate in New Zealand rose to 5.2%, the highest since 2020, but lower than economists' expectations of 5.3%. The euro strengthened by 0.7% against the U.S. dollar, reaching 1.1656. The dollar also weakened against the Japanese yen, falling 0.3% to 147.23.