Dollar Heading for Worst Weekly Loss in Over a Year
The dollar fell on Friday, setting the stage for its worst weekly loss in more than a year, following signals from U.S. President Donald Trump suggesting a less aggressive approach to imposing tariffs on China, adding to the ambiguity surrounding U.S. trade policies.
The yen reduced its early gains against the dollar after the Bank of Japan raised interest rates and adjusted its inflation forecasts upward without providing much guidance on the timing or pace of future rate hikes.
Investors moved to sell the dollar after Trump’s inauguration, as his immediate implementation of promised tariffs did not materialize, contradicting statements made during his campaign.
In a Fox News interview aired Thursday evening,
Trump indicated a preference to avoid imposing tariffs on China, expressing confidence in reaching a trade agreement with Beijing.
Francesco Pesole, a currency strategist at ING, commented, “It seems to fuel a growing sense that Trump may not follow through on his protectionist trade pledges as he did before his inauguration and that some of these tariff threats might not be realized if there are trade concessions.”
The yuan received support from Trump’s statements, climbing to an eight-week high in local trading at 7.2370 against the dollar.
On Thursday, the U.S. President also called for the Federal Reserve to cut interest rates, just days before the first monetary policy meeting under his administration, with broad expectations that officials would keep rates unchanged.
The U.S. Dollar Index, which measures the currency against six major peers, is poised for its largest weekly drop since November 2023, expected to fall more than 1.6% for the week.
The index hit a one-month low at 107.27 on Friday, dropping by 0.5% in the latest trades to 107.6.
The euro rose by 0.65%, touching its highest level since December 17 at 1.0515 dollars, and is on
track for a weekly gain of about two percent.
Data released today showed that business activity in the Eurozone started the new year with a
return to growth, albeit at a weak pace.
The British pound increased by 0.5% to 1.2417 dollars, also set for a weekly gain of two percent,
halting a three-week losing streak.
The Bank of Japan raised interest rates by 25 basis points at the conclusion of a two-day
monetary policy meeting.
The yen climbed to 154.845 against the dollar post-policy decision but trimmed gains after the
Bank of Japan’s Governor’s press conference hinted at no rush for further monetary tightening.
There was no significant change in the yen in the latest trades, remaining at 156 to the dollar.
In the realm of digital currencies, Bitcoin recorded a 2.2% rise in its latest transactions, reaching $105,435.
