The US dollar slipped on Monday, retreating after two weeks of gains, as investors refocused on trade risks and the Federal Reserve.
Recent reports suggested that Treasury Secretary Scott Bessent attempted to dissuade President Trump from firing Chair Jerome Powell. Concerns around central bank independence could continue to weigh on the currency, while the current political pressure could undermine the institution’s credibility.
At the same time, Commerce Secretary Howard Lutnick reiterated that August 1 remains a hard deadline for new tariffs, adding to the concerns over the trade outlook.
Meanwhile, Fed Governor Christopher Waller said the central bank should not wait for further deterioration in the labour market before cutting rates, supporting a move as early as the July meeting.
The 10-year note fell below 4.39%, extending its recent retreat. Expectations of interest rate cuts could continue to drive long-term yields lower. However, the bond market could remain exposed to the current political uncertainty.
Looking ahead, all eyes are now on tomorrow’s Fed Chair Jerome Powell speech. While dovish remarks could weigh on the currency and yields, a more cautious tone could provide temporary support.
