The dollar fell slightly on Wednesday in indecisive trading, as the lack of clarity on President Donald Trump’s plans for tariffs left financial markets in suspense.
Mr. Trump said at the White House on Tuesday that his administration plans to impose 10% tariffs on goods imported from China on February 1, the same day he said Mexico and Canada would be subject to customs duties of around 25%.
He also promised to impose tariffs on European imports, without giving further details.
Despite these threats, the lack of specific plans on Mr. Trump’s first day in office allowed the dollar to start the week down 1.2% against a basket of major indexes. It stabilized on Tuesday, finishing flat after an attempted rebound that fizzled as U.S. officials said any new taxes would be imposed in a measured manner.
The Dollar Index, which tracks the currency against the euro, yen and four other major rivals, was down 0.14 percent at 108 at 0054 GMT.
The euro slipped 0.07% to $1.0420, while the yen edged higher to 155.40 per dollar.
“While Trump has threatened to impose tariffs of up to 25% on Mexico and Canada, he has refrained from enacting them despite signing several executive orders,” said IG analyst Tony Sycamore.
“His decision not to target China is seen as a possible sign of a more cautious approach to tariffs than promised during his campaign, reducing inflation risks and potential actions by the hawkish Federal Reserve.”
Traders expect a quarter-point cut in interest rates from the Fed by July, while another cut by the end of the year is seen as a coin flip. face.
-Elsewhere, expectations are growing that the Bank of Japan will raise rates by a quarter point on Friday, supporting the yen.
The Chinese yuan remained stable at 7.2735 per dollar in offshore trading, after hitting its highest level since Dec. 11 on Tuesday at 7.2530.
“Tariffs of 10% on Chinese imports would be much lower than the 60% rate he mentioned during his campaign,” said Alvin Tan, head of Asia foreign exchange strategy at RBC Capital Markets .
“Added to this is the general feeling that Trump is not pursuing maximalist trade protectionism in his first actions, but seems to be positioning himself for trade negotiations,” Tan said.
“Overall, these elements suggest that the US dollar could fall further.”
The Canadian dollar fell around 0.1% to C$1.4335 per greenback, after a volatile week that saw it tumble as low as C$1.4520 overnight for the first time since March 2020 , feeling additional pressure from the cooling of inflation last month.
The Mexican peso also fell 0.1% to 20.6350 per dollar.
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