The dealer’s move nears: Trump’s tariff hand keeps FX traders glued

The tape opens like a poker room thick with tension—no one’s showing their hand, but the chips are moving. In the corner, the Aussie and Kiwi sit back, nursing early losses, their high-beta nature exposed under the harsh lights of a risk-off shuffle. The mood has soured. Asia's cards have turned cold—equities down, currencies soft—and the room knows why: the clock is ticking toward July 9, when the dealer, Trump, flips over the tariff river card he's been fanning all spring.

Only two players have managed to negotiate a side pot so far. The UK limps away with a 10% rake and some sectoral bruises, while Vietnam dodges the worst but still walks into a 20% front-loaded fee—rising to 40% if the U.S. suspects any shell-game transshipments. For the rest, the waiting game is over. Over the weekend, the President said he “signed some letters.” Twelve of them. No one knows who gets what—just that the house will collect, one way or another.

But this isn’t all-in just yet. Treasury’s Bessent stepped in to remind everyone: these are warnings, not final demands. The dealer isn’t flipping the switch until August 1. There’s still time to make an offer, still time to fold a bad bluff. And like all seasoned pit bosses, Commerce Secretary Lutnick confirms the table’s still open. Everyone’s invited to make a deal—just don’t expect the terms to get better with delay.

Behind the curtain, the U.S. is watching eighteen major players. Some look close to signing; others, as Bessent puts it, are “foot-dragging.” There’s noise that Europe and India are inching toward agreement.

Japan, on the other hand, seems to have drawn a bad seat. The yen, usually a quiet favorite when markets sweat, is slumping. Risk-off trades are working—just not in Tokyo. Prime Minister Ishiba is playing hardball, refusing to bend under pressure to take in U.S. cars and rice. The yen suffers while trade talks crawl. Ishiba says he’s ready for “all kinds of situations.” Traders hear that and think: no deal yet.

Meanwhile, Japan’s central bank is backing off the accelerator. The trade fog is dense, and the BoJ doesn’t want to veer off course. Weaker wage data only adds to the hesitation. Headline paychecks sagged in May, real wages fell nearly 3%, and with an election on the horizon, the government’s throwing cash around to keep things steady. Still, a rate hike looks like a card they won’t play this year.

The eurozone, meanwhile, is stuck in its usual drama. The EU talks to itself more than the U.S.—Germany wants a quick deal, France and Spain want a fight. There’s whisper of a two-month extension on the table, giving the bloc time to hash out its internal feuds. On the sectoral side, pharma is a standout—Switzerland is nearing a deal, which has lifted healthcare stocks and may give Ireland hope for a softer outcome.

For euro traders, this means more churn than trend. The pair feels trapped in its 1.17–1.1800 churn channel, with occasional head fakes toward a breakout if US equities rollover. But for now, nobody’s betting on a breakout. Not with the deck still being stacked behind closed doors.

Oil, always the most emotional player at the table, has taken a sharp turn. OPEC+ just threw another 548,000 barrels a day onto the market—an aggressive raise when demand is anything but guaranteed. Brent and WTI both slumped. The cartel says summer fundamentals are strong. Traders aren’t so sure. This feels less like confidence and more like a gamble, one that could backfire come autumn when demand fades and tariffs bite.

Gold, the old man in the room, took a rare step back. A nearly 1% drop as the dollar firmed on BRICS tariff talk. Still, it’s up over 25% on the year—comfortably parked as the long-duration insurance policy. Traders aren’t throwing it away. They’re just repositioning in case the BRICS game speeds up.

The week ahead is less about headlines and more about hands being played. The dealer’s bluffing, but no one wants to call too early. Trade talks are live. Tariffs are real. And somewhere between diplomacy and disruption, price action is starting to sniff out the winners and losers.

The table’s hot. The stakes are rising. And the next card could be wild.

The view

A weak Dollar is a good thing!

The dollar, once the apex predator of global finance, now slumps like a washed-up high roller at a busted blackjack table—chips gone, swagger spent. Like a Vegas slot with a jammed reel, it refuses to pay out, no matter how many hot data prints or stacked rate spreads are shoved into the machine. Traders linger, waiting for a blink, a twitch—anything. So far, the only action is southbound.

No asset embodies contradiction quite like the dollar in 2025. It’s supposed to rise when yields rise. It’s supposed to draw in capital when growth outperforms. It’s supposed to firm when uncertainty reigns. And yet, the DXY sits deeper below its 200-day moving average than at any point in the past two decades. The world’s reserve currency is not rallying—it’s reclining.

And markets are loving it.

U.S. equities, meanwhile, are doing pirouettes on a sugar high. Since Liberation Day, the S&P has roared to repeated highs. Take out the FX lens and foreign investors have done even better—local currency returns in Europe and Asia have outshone the U.S. benchmark. But for dollar-based portfolios, it’s been a dream run. Currency debasement has a way of greasing the gears—exports look prettier, earnings convert juicier, and financial conditions loosen without a single central bank cut.

This isn't lost on the White House. A weak dollar is a policy tool in all but name. As tariff deadlines approach and trade brinkmanship intensifies, the fog of uncertainty settles thicker over the market. Bloomberg’s measure of trade policy uncertainty is still perched at uncomfortable highs, and that ambiguity bleeds directly into FX pricing. The more uncertain the trade landscape, the less appetite there is for dollar exposure—especially when the Treasury itself seems content with the dollar’s slide.

The irony, of course, is that a falling dollar is supposed to be inflationary. And inflation still sits in the back of every policymaker’s mind like a half-forgotten nightmare. Apollo’s SHOK model says another 10% dip in the dollar adds half a point to inflation. Not catastrophic, but enough to make the Fed twitch. And yet, markets barely flinch. The equity rally rolls on, gold is steady, and rate cut bets still have oxygen.

In Asia, the weaker dollar has been manna from heaven. China hasn’t had to touch the controls. The yuan, still nominally pegged, has gently appreciated to 7.16—but on a trade-weighted basis, it’s at its weakest point in twelve years. It’s stealth devaluation without the drama, and Beijing couldn’t ask for better cover. For now, the U.S. is doing the easing on China’s behalf.

Taiwan is the standout—the NT dollar has punched back to life, emblematic of a broader reversal from the old Asian financial crisis script. In 1997, the story was one of hard pegs cracking under the pressure of overvalued currencies. Today, it’s the mirror image: artificially weak FX regimes now springboarding higher, as years of dollar hoarding pay off. The tide, at last, is coming in for Asia.

The question is whether it lasts. The 90-day tariff ceasefire expires this week, and with it, some of the shadowy ambiguity underpinning the dollar’s drift may be swept away. If the next chapter involves clarity, commitments, and maybe even compliance—if we see final deals rather than open threats—the dollar might finally stir.

But clarity is a rare bird in this administration’s aviary. Until then, the dollar stays slumped, smiling inwardly at the paradox it has become: weakening, yet beloved. Resting, not deceased. A parrot, perhaps, with just enough voom left for one final squawk.