The U.S. dollar firmed for a second consecutive day on Thursday but remained near an 11-week low as uncertainty grew over U.S. tariff policies.
President Donald Trump floated the possibility of a 25% “reciprocal” tariff on European cars and goods while also suggesting a delay in planned tariffs on Canadian and Mexican imports from March 4 to April 2.
A White House official stated that tariffs on Canadian and Mexican goods remained in effect pending a review of border security measures and efforts to curb the flow of migrants and fentanyl into the U.S. The mixed signals from the administration kept currency markets within recent ranges. The euro declined 0.1% to $1.0479, while investors awaited developments in Germany’s coalition government talks following the conservative party’s election victory.
The Canadian dollar remained near a two-week low against the U.S. dollar, while the Mexican peso was little changed at 20.423 per dollar. The dollar index rose to 106.6, pulling away from its two-month low of 106.12 reached on Monday but still down nearly 4% from its January peak.
Trade uncertainty, combined with weak U.S. business activity and a sharp drop in consumer confidence, has fueled concerns over economic growth and inflation. U.S. Treasury yields have declined, while money market traders anticipate at least two Federal Reserve rate cuts this year, with 58 basis points of easing priced in for 2025. The next rate cut is not fully expected until July.
The U.S. dollar rose 0.4% to 149.68 yen, though it remained near its weakest level against the Japanese currency since early December. A drop in U.S. yields and expectations of Bank of Japan interest rate hikes have supported the yen. Japan’s top currency official, Atsushi Mimura, reaffirmed Tokyo’s view that the yen’s appreciation aligns with an improving economy.
The Australian and New Zealand dollars, both sensitive to global trade tensions, hit two-week lows. In the cryptocurrency market, bitcoin climbed 2.2% to $86,320 after falling to its lowest level since November 11 at $82,156.99 the previous day.
