Dollar drifts lower as traders ponder Trump tariff plans

The dollar drifted somewhat little connected Wednesday successful indecisive trading arsenic a deficiency of clarity connected President Donald Trump's plans for tariffs kept fiscal markets guessing.

Trump said precocious Tuesday astatine the White House that his medication was discussing imposing a 10% tariff connected goods imported from China connected Feb. 1, the aforesaid time that helium antecedently said Mexico and Canada would look levies of astir 25%.

He besides vowed duties connected European imports without providing further details.

Despite those threats, a deficiency of circumstantial plans from Trump's archetypal time successful bureau saw the dollar commencement the week with a 1.2% descent against a handbasket of large peers. It stabilized connected Tuesday, ending level aft an attempted rebound fizzled, with U.S. officials saying immoderate caller taxes would beryllium imposed successful a measured way.

The dollar index, which tracks the currency against the euro, yen and 4 different apical rivals, was down 0.14% astatine 108 arsenic of 0054 GMT.

The euro slipped 0.07% to $1.0420, portion the yen edged up somewhat to 155.40 per dollar.

"While Trump threatened tariffs up to 25% connected Mexico and Canada, helium refrained from enacting them contempt signing respective enforcement orders," said Tony Sycamore, an expert astatine IG.

"His determination not to people China is being taken arsenic a imaginable motion of a much cautious attack to tariffs than promised during his campaign, reducing ostentation risks and imaginable hawkish Federal Reserve actions."

Traders expect a quarter-point Fed involvement complaint chopped by July, portion different simplification by year-end is considered a coin toss.

Elsewhere, expectations person been increasing that the Bank of Japan volition rise rates by a 4th constituent connected Friday, supporting the yen.

China's yuan was level astatine 7.2735 per dollar successful offshore trading, aft pushing to the strongest level since Dec. 11 connected Tuesday astatine 7.2530.

"10% tariffs connected China imports would beryllium acold beneath the 60% complaint helium mentioned successful his campaign," said Alvin Tan, caput of Asia FX strategy astatine RBC Capital Markets.

"On apical of this is the wide consciousness that Trump is not pursuing maximalist commercialized protectionism successful his aboriginal actions, but appears to beryllium positioning for commercialized negotiations," Tan said.

"Altogether these suggest that the U.S. dollar could driblet further."

The Canadian dollar eased astir 0.1% to C$1.4335 per greenback, pursuing a volatile week that saw it tumble arsenic debased arsenic C$1.4520 overnight for the archetypal clip since March 2020, feeling further unit from cooling ostentation past month.

The Mexican peso besides edged 0.1% little to 20.6350 per dollar.

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