The dollar is weak on Thursday, weighed down by the lack of concrete announcements on the customs duties that Donald Trump brandished throughout his campaign, as well as by some profit taking. Around 7:10 p.m. GMT, the greenback dropped 0.12% against the European currency, to 1.0423 dollars. Earlier, it had fallen as low as 1.0438. The Dollar Index, which compares the greenback to a basket of six currencies, also dropped 0.12%.
“The dollar’s progression seems a little out of steam”commented to AFP Shaun Osborne, analyst at Scotiabank. “The markets may decide to take some profits, (…) while concrete announcements on customs duties remain absent”he added. Before his election, Donald Trump had shown himself determined to impose new customs duties on all imported products, to preserve the American productive system. He did not rule out the possibility that they would reach 60%, or even more, for Chinese products. The prospect of this inflationary policy, among others put forward by the Republican, had propelled the greenback in the wake of the election.
“The market risks sliding”
The «buck» – another nickname for the American currency – has gained speed “in anticipation of an aggressive policy on tariffs introduced by the White House quickly or certainly in the first days of the administration”noted Mr. Osborne. Trump has indeed announced that he intends to impose customs duties of 25% on products from Canada and Mexico starting February 1, following his inauguration on Monday.
-Tuesday evening, the new American president also assured that his government was discussing “10% customs duties on Chinese products”, “probably for February 1st”. These would be customs duties of a magnitude much lower than the 60% previously mentioned by Mr. Trump. Above all, no decree to this effect has yet been signed. “The longer markets wait for concrete measures to be taken on tariffs – who will be affected, with what intensity, and how long these tariffs will last – the more likely the dollar will slide”a conclu M. Osborne.
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