NEW YORK: The dollar weakened on Friday ahead of a planned announcement next week by US President Donald Trump on reciprocal tariffs, which has left traders uncertain of how to trade the currency.
“The one word that I keep hearing over and over from clients, and on earnings calls and things, is uncertainty. And you hear this from the central bankers as well,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
“The one thing we do know is that on April 2, we’re going to get reciprocal tariffs. We don’t know exactly what that means,” Chandler said. As a result, “I see the dollar broadly consolidating.”
Traders have had bouts of optimism that the trade levies will not be as severe as feared, but concerns remain that they will dent economic growth and reignite inflation.
Trump on Wednesday announced a 25% tariff on imported cars and light trucks starting on April 3.
“Trump tariff uncertainty is driving markets with investors waiting for the April 2 details,” said Mohit Kumar, a senior economist at Jefferies. “We … think that the initial announcement would open the door for further negotiations and the final impact of tariffs would not be as bad as feared.”
The US currency dipped even after data showed that core inflation rose 0.4% in February, more than expected.
“It’s really old news. And even though the core rate was firmer than expected, US bonds have rallied,” Chandler said, noting a drop in US Treasury yields.
Headline inflation was as expected, with a 0.3% rise. US consumer spending also rebounded in the month.
The euro was last up 0.17% at $1.0819.
Data earlier in Europe showed that inflation in March came in far below forecasts in France and Spain, while consumer expectations for price growth remained muted, bolstering bets for another European Central Bank rate cut.
French consumer spending also fell, while Germany’s unemployment rate rose more than expected and morale among Italian businesses and consumers slumped in March.
The dollar was 0.57% lower against the yen at 150.19 per dollar, with the dollar weakening in line with the drop in benchmark 10-year Treasury yields.
Data on Friday showed that core consumer inflation in Japan’s capital stayed above the central bank’s target and accelerated in March.
Sterling strengthened 0.08% to $1.2955.
British shoppers unexpectedly loosened their purse strings last month, official data showed on Friday, defying most forecasts from analysts who had predicted a fall in sales volumes against a backdrop of weak overall growth in the economy.
In cryptocurrencies, bitcoin fell 3.25% to $84,469.42.
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