The US dollar has strengthened 1.7% since the start of July, reflecting a shift in how markets are responding to trade uncertainty. Despite ongoing tariff risks, expectations remain that the US administration will avoid economically damaging outcomes, while a firmer macro backdrop—marked by labour market resilience and record equity highs—is supporting investor confidence.
Meanwhile, the Japanese yen has come under pressure amid speculation that new tariffs and political uncertainty could delay Bank of Japan tightening. With the ruling coalition at risk of losing its upper house majority, and JGB yields reacting sharply, markets are increasingly pricing in a cautious BoJ stance and further yen weakness.