BRICS and the Buck: Pressure Points and Power Plays.

  • India under US scrutiny for its Russian oil purchases; possible sanctions or trade leverage in play, putting pressure on the rupee.

  • Brazil and South Africa show resilience despite US tariffs, with strong yields and bold monetary policy supporting local currencies.

  • US-China trade relations remain a key risk, with a deadline on August 12 that could reignite tensions.

  • The Fed may cut rates more than twice, according to Mary Daly; key voter speeches and ISM data are in focus this week.

  • The dollar faces credibility issues as political interference in US economic data undermines investor confidence.

USD: BRICS Under the Spotlight
The US dollar is holding steady after Friday’s sharp selloff, but geopolitical winds are swirling. President Trump has turned his attention to India, raising the spectre of secondary sanctions over its massive 1.7 million barrels-per-day imports of Russian oil. While the motive remains unclear—punishing India or pushing for greater access to its markets—pressure is building on the rupee. Traders are watching the 88.00 level in USD/INR, with questions about whether the Reserve Bank of India will step in to defend it, especially as inflation remains subdued and the RBI has shown tolerance for greater FX flexibility this year.

Brazil is also in Washington’s crosshairs. US tariffs stand at 50%, citing human rights concerns linked to the legal pursuit of ex-President Bolsonaro, who was placed under house arrest yesterday. With tensions high and talk of 100% tariffs not off the table, all eyes turn to President Lula’s national address tomorrow. Despite the heat, the Brazilian real is holding up—buoyed by global appetite for its near-15% yields. South Africa’s rand is also showing resilience amid 30% US tariffs, supported by the central bank’s bold move to target just 3% inflation, attracting inflows into local bonds.

The broader concern is whether the current calm in US-China trade holds. Markets are banking on it, but the next key date is August 12. If tensions reignite, it may confirm that Trump is ramping up pressure on all BRICS members in a coordinated push.

Back on home soil, Fed official Mary Daly (non-voter) hinted that more than two rate cuts could be on the cards this year. Markets are pricing in around 60 basis points of easing. More weighty voices—Fed voters Susan Collins and Lisa Cook—speak tomorrow. For today, a modest uptick in the ISM services data may offer the dollar some support, but any DXY rebound likely stalls around 99.00/99.25.

EUR: Holding Steady in Quiet Waters
The euro is in a holding pattern around 1.1550, with little to move it in either direction. Buyers may re-emerge if the pair dips to the 1.1500–1.1520 zone, especially if US data disappoints. Eurozone PPI data out today (forecast 0.6% YoY) serves as a reminder that the ECB is now more concerned about low inflation than high. ING still expects the ECB to cut rates in September—a bold forecast amid a fragile backdrop.

GBP: Sterling Resilient Amid Dollar Weakness
The pound rose sharply after Friday’s weak US jobs data but failed to break above 1.3300. It found support near 1.3250 and is once again testing higher ground as the dollar remains under pressure globally. Improved risk sentiment from rebounding equity markets is helping sterling. UOB notes that the risk of GBP/USD falling below 1.3140 has faded, but only a break of 1.3355 would confirm stability.

The dollar’s drop was compounded by the dismissal of the head of the Bureau of Labor Statistics, following accusations from Trump that the agency published “fake” data. This political interference has rattled investors and raised concerns about the credibility of US institutions. ING warns that such uncertainty adds risk premiums to both the dollar and US Treasuries.

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.