US Dollar Pressured by Domestic Policy and Economic Outlook

The US Dollar remains under pressure due to domestic policy uncertainty, including the potential for a weaker currency resulting from Treasury bond buybacks. Last week's buyback announcement was noted for initially weakening the Dollar and boosting gold prices, with markets now closely watching for policy signals from the Federal Reserve. Analysts highlight that communication from Fed Chairman Warsh is contributing to market volatility, while expectations of sideways US economic growth and moderating inflation add to the complex outlook.

Heightened US-Iran Geopolitical Tensions

Geopolitical tensions are a key market focus as the United States is expected to announce an expansion of secondary sanctions against entities and countries doing business with Iran. This development is keeping Middle East risk elevated, even as crude oil prices have retreated from recent highs. Markets remain on alert for the official announcement from the US Treasury, with international calls emerging to maintain the current US-Iran ceasefire.

US Escalates Trade Disputes with Canada and China

Global trade tensions have intensified following a US announcement of steep new tariffs on Canadian exports, including a planned 50% rate on autos, trucks, and steel. The measures have caused the Canadian Dollar to fall sharply and created significant uncertainty for Canada's economic outlook. In a related development, the US is also reportedly planning tariffs on China over industrial overcapacity, signaling a broad and aggressive trade policy stance.