The U.S. dollar remained near a one-week low against its major counterparts on Tuesday, as traders questioned whether President-elect Donald Trump’s tariffs would be less aggressive than promised.
On Monday, the greenback slipped against currencies like the euro and the pound sterling following a Washington Post report that Trump aides were exploring plans that would apply tariffs only on sectors considered to be essential to the national or economic security of the United States.
However, the currency regained some ground after Mr. Trump denied the information in a message published on his Truth Social platform.
The Dollar Index, which measures the currency against the euro, pound sterling and four other currencies, rose slightly to 108.38, after falling as low as 107.74 overnight, its lowest level since December 30.
On January 2, the index reached 109.58 for the first time since November 2022, largely due to expectations that fiscal stimulus, reduced regulation and increased tariffs promised by Mr. Trump will boost American growth.
“(Trump’s) 10-20 percent universal tariffs have always been seen as unlikely to materialize in such a tough form. So the Washington Post report reinforced that widely held view, even though Trump has minimized,” said Chris Weston, head of research at Pepperstone.
“It is clear that the last thing Trump wants at this point is to lose his influence and credibility as the negotiations approach…even if the WaPo report becomes reality in due course.”
The eurozone has been particularly targeted by Mr. Trump’s threats of tariffs, and the euro was down slightly at $1.03795, after hitting a one-week high of $1.0437 on Monday.
Sterling was also slightly weaker at $1.125085, after climbing as high as $1.2550 in the previous session.
The dollar gained 0.3% to 158.23 yen, its highest level since July 17, supported by rising U.S. Treasury yields.
Against the Canadian dollar, the U.S. currency rose slightly to 1.4345 Canadian dollars, after falling to 1.42805 Canadian dollars on Monday for the first time since December 17 after Canadian Prime Minister Justin Trudeau said he would leave his post as leader of the ruling Liberals in the coming months.
“The price tells traders all they need to know: Markets think the economy will be better off without Trudeau,” said Kyle Rodda, senior financial markets analyst at Capital.com.
In cryptocurrencies, bitcoin was around 0.9% stronger at $102,560, trading at its highest levels since Dec. 19.
