What are the reasons for the dollar's return to growth at the beginning of the week
The US dollar last week recorded its weakest week in more than a year as tariff fears subsided, but fears resurfaced again with Trump threatening Colombia to punish it with tariffs.
Tensions in Colombia have shown that it is too early to put aside the risks of tariffs in the coming period.
Trump has threatened to impose tariffs on Colombia to punish it for refusing to accept military flights carrying deported migrants.
The Mexican peso and the Canadian dollar also fell this week after Trump said last week that he might impose tariffs on products from Canada and Mexico starting from February 1.
DXY
The dollar index is still close to its lowest level in a month, which it touched last week, now the index has risen by about 4% since the US elections in early November.
The prospect of high tariffs on goods from countries including China, Canada, Mexico and the eurozone has raised concerns about a renewed bout of inflation, boosting Treasury yields and the US dollar in recent months.
EURUSD
The euro also fell 0.2% today ahead of the European Central Bank's policy meeting this week, which is expected to lower borrowing costs.
US10Y
The benchmark yield of US 10-year bonds fell by 3 basis points to 4.593% in Asian trading hours.
USDJPY
The dollar-yen pair rose slightly today after falling at the beginning of the Asian session for the third day of declines, especially after the Bank of Japan raised the interest rate to its highest level since the global financial crisis and revised its inflation forecasts.
Bank of Japan Governor Kazuo Ueda said the central bank will continue to raise interest rates as the scope of wage and price increases widens in the economy, but gave little evidence about the timing and pace of future rate increases.
However, this interest rate hike may provide an incentive for the yen to appreciate in the coming weeks.
AUDUUSD & NZDUSD
The Australian dollar and the New Zealand dollar fell but remained closer to their one-month highs, and the Australian markets are also closed for the day.
The Fed is waiting
This week, attention will be focused on how central banks and policymakers react after Trump said he wanted the Fed to cut interest rates.
The Fed is expected to keep interest rates unchanged next Wednesday, although investors will be watching for clues on whether a rate cut could happen soon if inflation falls back to near the US central bank's annual target of 2%.
