The dollar fell on Monday in a volatile session after conflicting reports on how aggressive the US tariff plans could be. president-elect Donald Trump when he takes office.
The dollar fell as much as 1.07% in the session against a basket of major currencies after the Washington Post reported that Trump’s advisers were exploring plans that would apply tariffs to all countries, but only to sectors considered critical to the economy. national or economic security USAeasing concerns about harsher and broader levies, Reuters reported.
The dollar then sharply halted its declines after Trump denied the report in a post on his Truth Social platform. “The reality here is that Trump’s views on Social Truth are going to drive currency volatility for a while and the reaction this morning is indicative of the underlying dynamics,” he said. Karl Schamottachief market strategist at Corpay in Toronto.
“The market consensus is that Trump’s bark will be worse than his bite, and any news that confirms that concept is fuel for a rally in risk assets and a drop in dollar and bond yields.” Treasurebut the reality here is that downside risks persist and there is no clear end point to that,” Schamotta added.
He dollar indexwhich measures the value of the US currency against a basket of currencies, fell 0.64% to 108.26, while the euro rose 0.76% to $1.0386. The dollar was headed for its biggest daily percentage drop since Nov. 27, while the euro was headed for its biggest daily gain since Aug. 2.
The dollar index had hit a two-year high of 109.54 last week on track for its fifth consecutive weekly gain, as the resilient economy, the potential for higher inflation from tariffs and a slower pace of tax cuts Federal Reserve rates have supported the dollar.
He chinese yuan It strengthened by 0.16% against the dollar and stood at 7.348 units per dollar. Last week, the dollar hit a 26-month high against the Chinese currency as China is seen as one of Trump’s top tariff targets.
“Renminbi weakness has accelerated recently in anticipation that President-elect Trump will move quickly to further increase tariffs on imports from China,” he said. Lee Hardmansenior currency analyst at MUFG.
He also cited “the marked widening of yield differentials between the United States and China, which are fueling a weakening of the renminbi.” Before the market opens on Monday, the People’s Bank of China set the average exchange rate, around which the yuan can trade in a 2% band, at 7.1876 per dollar.
He Canadian dollar strengthened 0.74% against the US dollar to 1.43 Canadian dollars per dollar after the canadian prime minister, Justin Trudeausaid he will resign as leader of the ruling Liberals next month.
Attention in the United States
Investors were attentive to the report non-agricultural employment December U.S. report, to be released Friday, to gain more clarity on the health of the world’s largest economy.
It is expected that a series of those responsible for the monetary policy of the Federal Reserve (Fed) speak this week and are likely to reiterate recent comments that the battle to control the inflation It’s not over yet.
He dollar has strengthened on expectations of fewer Federal Reserve rate cuts this year, and its rise to a two-year high last week pushed the euro to its weakest level in more than two years.
Another factor that has provided the dollar with additional support as a safe haven has been the uncertainty over Trump’s plans to impose strong import tariffstax cuts and immigration restrictions after his inauguration on Monday the 20th.
“There is still enormous uncertainty about the speed at which we will see policy announcements and to what extent reality will match the rhetoric, so I think that leaves enormous uncertainty in the markets,” said Ray Attrill, head of foreign exchange strategy. in National Australia Bank.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
