By Hani Abuagla, Senior Market Analyst, XTB MENA
The US Dollar started June on the back foot as renewed trade tensions weighed on investor sentiment. The decline erased last week’s gains and marked a cautious start to the month for currency markets.
The move followed President Donald Trump’s announcement of a steep increase in tariffs on steel and aluminum imports to 50%, effective June 4. At the same time, tensions with China resurfaced after Beijing rejected Trump’s accusations of violating the Geneva truce struck earlier in May. While US officials cited failures by China to remove non-tariff barriers, Beijing urged Washington to lift what it described as discriminatory trade restrictions.
Although Treasury Secretary Scott Bessent suggested that a call between Trump and President Xi may take place soon, markets remain wary of further escalation. The lack of clear progress risks reigniting trade volatility just as investors look for greater policy clarity.
Meanwhile, the yield on the 10-year US Treasury note rose, reflecting investors’ concerns debt. Investors could remain cautious ahead of key US economic releases this week, including ISM PMIs and the Non-Farm Payrolls report, which could help shape expectations for future Federal Reserve decisions.
