[TOKYO] The dollar hovered just below a three-week high versus major peers on Monday (Mar 24) as jittery traders sought clarity on US President Donald Trump’s next round of tariffs.
US President Donald Trump’s administration is likely to exclude a set of sector-specific tariffs while applying reciprocal levies on April 2, Bloomberg News and the Wall Street Journal reported, citing officials.
The US dollar index, which measures the currency against a basket of six counterparts, was marginally lower at 104.02 as of 1201 GMT, after touching 104.22 on Friday for the first time since March 7.
“I would imagine that markets will remain anxious and sensitive to any news that comes out regarding Trump tariffs ahead of that April 2nd announcement, so I expect some market jitters certainly this week,” said Jane Foley, head of FX strategy at Rabobank.
The dollar has been under pressure for most of this year as the market’s assumptions that Trump would quickly usher in pro-growth policies transformed into worries that the president’s aggressive and erratic trade policies could trigger a recession.
The next round of tariffs is due on April 2, when the White House will announce reciprocal levies on many countries.
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Last month, Trump said he intended to impose auto tariffs of around 25 per cent, along with similar duties on semiconductors and pharmaceutical imports. However, after lobbying efforts from the three largest US automakers seeking a waiver, he later agreed to postpone certain auto tariffs.
The euro rose 0.22 per cent to US$1.0834, recouping some of its losses of last week and adding to its 4.4 per cent gain on the dollar so far this month.
Eurozone business activity grew at its fastest pace in seven months in March, supported by an easing in the long-running manufacturing downturn despite slower growth in services, a survey showed.
“Looking at the PMI data that we’ve seen this morning, a little bit mixed and so that’s not really going to alter the overall tone of the market still concentrating on those tariff announcements,” Foley said.
The shared currency had been buoyed to the highest since early October at US$1.0955 last week on optimism over Germany’s move to loosen fiscal constraints in order to boost military and infrastructure spending.
However, the currency slipped back in recent days in the lead up to the actual ratification of the change, with Germany’s upper house of parliament passing the bill on the so-called debt brake on Friday.
The Japanese yen softened against the greenback, pressured by a rise in US Treasury yields.
Japanese finance minister Katsunobu Kato’s warning about persistent deflation, in an interview with the Financial Times, has created some concern about the pace of interest rate hikes from the Bank of Japan, Foley said.
The dollar gained 0.26 per cent to 149.7 yen. The currency pair tends to track changes in bond yields, and 10-year Treasury yields added 4.4 basis points to 4.296 per cent on Monday.
Sterling gained 0.26 per cent at US$1.29485 ahead of British finance minister Rachel Reeves’ spring budget update later this week.
The Turkish lira slightly weakened to about 38 per dollar , as a Turkish court on Sunday jailed Istanbul Mayor Ekrem Imamoglu, President Tayyip Erdogan’s main political rival, pending graft charges, which Imamoglu denies.
The lira briefly lurched to a record low of 42 per dollar last week, when Turkey’s central bank said it had suspended one-week repo auctions and hiked its overnight lending rate to 46 per cent, a move that economists say amounts to a tighter policy stance.
Markets also have an eye on a potential Black Sea ceasefire deal as US and Russian officials began talks in Saudi Arabia on Monday. REUTERS
