In Tokyo and Gdansk on Jan 22, the dollar faced difficulties in recovering against major currencies, lingering near two-week lows due to uncertainty surrounding President Donald Trump's tariff plans. Trump indicated discussions on imposing tariffs on Chinese imports by Feb. 1 and mentioned potential levies on Mexico and Canada. He also hinted at duties on European imports, lacking specific details.
Despite the threats, the dollar started the week with a 1.2% slide against key peers, stabilizing on Tuesday after a failed rebound attempt. The dollar index, tracking against six major counterparts, dipped 0.1% to 108 on Wednesday, close to the two-week low of 107.86.
Deutsche Bank's Jim Reid noted, "Tariffs have again grabbed the headlines overnight as Trump commented in the evening that his threat of a new 10% tariff on China was still on the table..."
Trump's recent actions have created uncertainty, as he ordered reviews of trade issues by April 1. Economic analysts foresee Trump's policies as potentially stimulating growth but also causing inflation. The dollar rose slightly against the yen to 155.715 and remained steady against the euro at $1.0428.
The Canadian dollar held steady at 1.4326 per U.S. dollar, while the Mexican peso rose by 0.19% to 20.572 per dollar. China's yuan weakened slightly to 7.275 per dollar in offshore trading.
Alvin Tan, head of Asia FX strategy at RBC Capital Markets, mentioned, "On top of this is the general sense that Trump is not pursuing maximalist trade protectionism in his early actions, but appears to be positioning for trade negotiations."
In summary, the ongoing trade developments and Trump's approach suggest a potential further decline in the U.S. dollar's value.