The US dollar drifted slightly lower on Wednesday as financial markets grappled with uncertainty surrounding President Donald Trump’s tariff plans. Despite Trump’s statements about imposing a 10 per cent tariff on Chinese imports and 25 per cent levies on goods from Mexico and Canada starting February 1, a lack of concrete details has kept traders on edge.
On Tuesday evening, Trump reiterated his administration’s consideration of tariffs but stopped short of enacting them immediately. The dollar index, which measures the greenback against a basket of six major currencies, dipped 0.14 per cent to 108 as of 0054 GMT. The euro slipped 0.07 per cent to $1.0420, while the yen edged up slightly to 155.40 per dollar.
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Despite the tariff threats, the dollar began the week with a 1.2 per cent slide as markets remained wary of the administration’s next moves. It stabilised on Tuesday, ending flat after an attempted rebound lost momentum. U.S. officials have indicated that any new tariffs would be rolled out gradually, calming some fears of immediate disruption.
“While Trump threatened tariffs up to 25 per cent on Mexico and Canada, he refrained from enacting them despite signing several executive orders,” said Tony Sycamore, an analyst at IG. “His decision not to target China aggressively suggests a more cautious approach, which could help ease inflation concerns and prevent the Federal Reserve from adopting a more hawkish stance.”
Traders are currently pricing in a quarter-point Fed interest rate cut by July, with another potential cut by year-end viewed as a coin toss.
China’s yuan remained steady at 7.2735 per dollar in offshore trading, following its strongest level since December 11 on Tuesday, when it touched 7.2530. The Canadian dollar eased by 0.1 per cent to C$1.4335 per US dollar,
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