The dollar weakened due to uncertainty about the tariffs imposed by Trump
Speaking on Tuesday evening, Donald Trump said that his administration is discussing imposing 10% tariffs on goods imported from China on the first of February, in addition to what he previously stated that Mexico and Canada will face duties of about 25%.
He also pledged to impose tariffs on European imports, without providing further details.
The US dollar started the week down by 1.2% against a basket of major currencies, and ended yesterday stable after the failure of a strong recovery attempt, as US officials said that any new taxes will be imposed in a deliberate manner.
But there is a general feeling that Trump does not seek maximum trade protectionism in his actions, but he seems to be preparing for trade negotiations.
Thus, in aggregate, this indicates that the US dollar may fall further.
Traders now expect a quarter-point cut in federal interest rates by July, and the likelihood of another cut by the end of the year.
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The Canadian dollar fell by about 0.1% against its US counterpart, after a volatile week that saw it fall to its lowest level since March 2020, as it felt additional pressure from the slowdown in inflation last month.
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Today, the Mexican peso lost about 0.15% against the US dollar after the US President's statements.
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The Chinese yuan also fell by about 0.24% to 7.2865 to the dollar in foreign transactions.
But the 10% tariffs that Trump talked about on Chinese imports are much lower than the 60% rate that he mentioned in his campaign.
NZDUSD The New Zealand dollar also fell by 0.42% to 0.5655 dollars after inflation grew in the fourth quarter at an annual rate of 2.2%, which is comfortably within the range of the central bank's target from 1% to 3%.
Traders currently expect the Reserve Bank of New Zealand to cut interest rates by half a percentage point at the next February meeting by more than 65%.
