The US dollar is strengthening on Tuesday, buoyed by the White House delaying tariffs on Chinese imports until December and higher consumer prices in July. The greenback was capped on greater expectations over the central bank cutting interest rates again next month.
On Tuesday, the United States Trade Representative (USTR) office announced that the federal government will postpone tariffs on Chinese imports from September 1 to December 15. It also removed other products from the list of goods that were supposed to be slapped with levies.
According to the USTR, these products will not be subjected to tariffs for another three months: electronics, apparel, footwear, Christmas decorations, chemicals, food and kitchen items, and baby products. What items were going to be removed from the list entirely was not confirmed by the USTR.
USTR officials cited health, safety, and national security concerns as justification for the delay.
However, speaking to reporters, President Donald Trump said that his administration was temporarily pausing the import taxes because of the Christmas shopping season.
Weâre doing this for the Christmas season. Just in case some of the tariffs would have an impact on US customers. So far theyâve had virtually none. But just in case they might have an impact on people, what weâve done is weâve delayed it, so that they wonât be relevant to the Christmas shopping season.
The move helped the US Dollar Index surge 0.44% to 97.81, from an opening of 97.48.
On the data front, consumer prices in July increased as the consumer price index (CPI) jumped 0.3%, driven by gains in the cost of energy and other goods. In the 12 months through July, the CPI has risen 1.8%. Also, the NFIB Small Business Optimism Index in the US rose 1.4 points to 104.7 last month, up from 103.3 in June.
According to data from the CME Group FedWatch tool, financial markets have priced in a September rate cut by the Federal Reserve. The target rate probability of another quarter-point rate reduction at the Federal Open Market Committee (FOMC) policy meeting is 95%, up from 85% to start the trading week.
The USD/CAD currency pair rose 0.08% to 1.3239, from an opening of 1.3229, at 19:23 GMT on Tuesday. The EUR/USD slipped 0.38% to 1.1173, from an opening of 1.1214.
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