The dollar maintains its gains as Trump's tariffs approach

The US dollar rose to a two-week high of 1% on Thursday, now trading near the levels of 107.40, after Trump confirmed that his proposed tariffs of 25% on Mexico and Canada will take effect on March 4, along with additional duties of 10% on Chinese goods.

Despite the recent rally, the dollar remains low for the month, as a series of economic reports have triggered warning signals, prompting markets to price in two interest rate cuts by the Fed this year.

The second estimate for the fourth quarter also showed a slowdown in US economic growth to 2.3% annually, down from 3.1% in the third quarter, in line with initial expectations.

At the same time, weekly applications for unemployment benefit increased by almost 22 thousand to 242 thousand applications, the highest in more than two months, which indicates some decline in the labor market.

DXY

The US dollar index is now hovering near its highest level in a week against a basket of currencies.

However, the index was on track for a monthly loss of 1.1%, the worst since August, as a weaker-than-expected set of economic data led dealers to increase bets on further interest rate cuts by the Fed this year, which in turn led to a decline in US Treasury bond yields and acted as a drag on the dollar.

EURUSD

The euro faced difficulty at its two-week low at 1.0380 dollars, now the monthly is still up 0.36% so far.

USDCAD

The Canadian dollar pair rose near the levels of 1.4450 on Friday, rising for the sixth day in a row, with a decline in the Canadian currency due to Trump's almost daily statements regarding tariffs for Canada and Mexico.

AUDUSD

The risk-sensitive Australian dollar fell to its lowest level in more than three weeks to 0.6210 dollars, after falling by more than 1% in the previous session.

During the week, the Australian dollar was set to lose more than 2%, although it was the best performer on a monthly basis with a slight gain of 0.2%.

NZDUSD

The New Zealand dollar fell by 0.12% to 0.5625 US dollars and was on its way to a loss of more than 2% for the week, its worst weekly performance in five months.