Traders Weigh Trump’s Tariff Plans as Dollar Weakens

22 Jan 2025 , 10:26 AM

Indecisive trade on Wednesday caused the dollar to veer slightly lower as financial markets continued to speculate about President Donald Trump’s tariff plans.

On the same day that he had previously stated that Mexico and Canada would be subject to levies of about 25%, Trump announced late Tuesday at the White House that his government was considering enacting a 10% duty on goods imported from China on February 1.

Without going into further detail, he also promised taxes on imports from Europe.

Despite those warnings, the dollar began the week down 1.2% vs a basket of major rivals due to Trump’s first day in office’s lack of concrete objectives.

After an unsuccessful attempt to recover, it stabilized on Tuesday and ended the day flat. U.S. officials stated that any further taxes would be implemented gradually.

The dollar index, which compares the currency against the euro, yen, and four other major competitors, was down 0.14% at 108.

The yen marginally increased to 155.40 per dollar, while the euro fell 0.07% to $1.0420.

While a second cut before year-end is regarded as a toss-up, traders anticipate a quarter-point Fed interest rate cut by July.

In other news, the Bank of Japan is expected to bolster the yen by raising interest rates by a quarter percent on Friday.

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