The dollar extended its slide on Tuesday, weighed down by soft US regional data and renewed political pressure on the Fed, reinforcing the market’s dovish bias. The Richmond Fed manufacturing index plunged to -20, far below expectations, while business conditions and the Philly Fed survey showed slight improvements but remained in contractionary territory.
Treasury Secretary Bessant added to the day’s drama with mixed messaging, praising Fed Chair Powell’s capabilities while simultaneously calling for an internal review and pressing for rate cuts, aligning with President Trump’s stance that rates should be 300 basis points lower.
Trade headlines added to the noise with Bessant signaling a hard August 1 deadline for trade talks and Trump announcing a new deal with Indonesia, albeit one that still includes steep tariffs.
With the Fed in blackout mode ahead of its next meeting, markets are left to navigate a fog of political theatrics and economic uncertainty. The euro climbed to near one-month highs as the dollar softened. And traders now turn to upcoming US data and a heavy Treasury supply schedule for further direction.
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