U.S. Dollar Drops 0.75% Weekly Amid Mixed Economic Signals, Trump Tariff Threats

The U.S. dollar closed the week with its largest decline in over a month, despite a late rally driven by stronger-than-expected economic data, as market participants grappled with conflicting signals from macroeconomic indicators and political pressures. The dollar index, which tracks the greenback against six major currencies, fell 0.75% for the week, ending at 97.45 on Friday, even after a 0.3% gain in the final session [1]. The mixed economic landscape—marked by a sharp drop in new orders for key capital goods and uneven business investment trends—heightened concerns about second-quarter growth [1]. Traders also weighed the implications of upcoming central bank meetings and escalating tariff threats from the Trump administration, which clouded the dollar’s near-term prospects [1].

Oil prices, a critical barometer for global demand, mirrored the dollar’s struggles, with both Brent crude and West Texas Intermediate (WTI) posting significant weekly declines. Brent crude settled at $68.44, down 1% for the week, while WTI closed at $65.16, a 3% drop. The losses reflected growing worries over oversupply and weaker industrial activity in the U.S. and China, even as investors speculated on the potential for U.S. trade deals to stimulate growth. However, near-term volatility remained entrenched as traders navigated political risks, including Trump’s repeated calls for lower interest rates and his latest tariff threats targeting Russian oil imports [1].

The president’s aggressive stance on energy policy further complicated the outlook. Trump reiterated demands for rate cuts during a press event, clashing with Federal Reserve Chair Jerome Powell, though he clarified this week that he does not plan to replace Powell. The administration also warned of 100% tariffs on countries importing Russian oil unless Moscow agrees to a peace deal with Ukraine within 50 days—a deadline set for early September. Analysts view the measure as politically symbolic rather than economically impactful, citing its potential to drive prices higher amid inflationary pressures [1]. Similar threats against Venezuela in the past failed to alter global purchasing patterns, particularly in Asia, suggesting limited market credibility in this instance [1].

The dollar’s weakness was compounded by uncertainty surrounding central bank policy. While the Federal Reserve and Bank of Japan are expected to maintain current interest rates in upcoming meetings, market participants are closely monitoring post-meeting statements for hints of future action. In Japan, the yen weakened against the dollar after softer inflation data and a recent electoral setback for Prime Minister Shigeru Ishiba’s coalition, yet the greenback still fell 0.7% against the yen for the week [1]. Meanwhile, U.K. sterling also declined following weaker-than-expected retail sales data, adding to the dollar’s broader struggles [1].

Looking ahead, the market faces a pivotal week as central banks deliberate and Trump’s policy rhetoric continues to influence sentiment. Oil prices, already at multi-month lows, remain vulnerable to further downward pressure from weak demand signals and geopolitical tensions, though any policy-driven interventions could introduce short-term volatility. Analysts emphasize that the dollar’s trajectory will hinge on the resolution of these overlapping risks, from trade policy developments to divergent central bank paths, as investors seek clarity in an increasingly fragmented landscape [1].

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Source: [1] [title] [https://coinmarketcap.com/community/articles/6883e10da921482b9c251236/]