US dollar retreats from 2-year high as Trump touts ‘tremendous’ tariff power, but holds off on swift action
The US dollar (Dx = fTo be in style DX-Y.NYB) later withdrew From about two years of highs On Friday, after a month of falling on behalf of President Trump, he said he would not “likely” impose tariffs on China.
“We have one very big power over China, and they don’t want them,” Trump told Fox News in an interview Thursday. “But it’s a huge power over China.” :
The U.S. dollar index, which measures the dollar’s value against a basket of six currencies — the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss dollar — fell more than 0.5% in more than a year on Friday. The appearance of the greenback Its biggest one-day decline since November 2023 Earlier this week, as the president refrained from making sweeping tariffs on his first day in office.
Still, the index gained about 7% since the September elections and is about 4% since the day of the elections.
The dollar’s price action was largely driven by two main catalysts. Trump’s election and subsequent Republican sweep, along with further feeding, in the face of strong economic data.
But the uncertainty of Trump’s tariff policy has been the biggest driver in recent weeks and looks set to stay that way in the coming months.
Despite the recent moves to the downside, Bank of America analysts argue that it remains a reasonable market when it comes to rate risk.
“Even if the tariffs are delayed, they are likely to be a key policy pillar for the new administration,” wrote Adarsh ​​Sinha, head of FX and Bofl’s strategy. “More importantly, uncertainty remains over the timing of the tariff.”
Read more. What are the rates and how do they affect you?
Capital Economics, meanwhile, expects the dollar index to rise this year, noting that when adjusted for inflation, the Repainback is at its strongest levels since the signing of the international growth pact. The Plaza Accord, In 1985
“We believe that US monetary policy and the underlying movements in interest rates could further push the dollar in the coming quarter,” Simon McAdam, chief global economist at Capital Economics, wrote Friday.
Kyle Chapman, FX markets analyst at Ballinger Group, added that the dollar is “incredibly sensitive right now on the rate outlook.”
Instead, Trump refused to limit the tariffs on his first day in office Issue of memorandum On Monday, federal agencies are in charge of evaluating US trade policy.
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