The U.S. dollar edged higher on Wednesday, while other major currencies remained within tight ranges, as traders awaited further details on U.S. President Donald Trump’s anticipated tariff plans. These developments, expected later in the day, could influence market sentiment in the short term.
The euro stood at $1.07875, and the British pound was at $1.2914, both showing slight declines ahead of a critical announcement from the White House at 2000 GMT. The announcement is expected to outline new tariffs, potentially upending the global trade landscape.
Trump, who has repeatedly referred to April 2 as “Liberation Day,” is set to unveil measures that could trigger reciprocal tariffs on countries imposing duties on U.S. goods. According to White House spokesperson Karoline Leavitt, these new tariffs will take effect immediately following the President’s announcement.
Carol Kong, a currency strategist at Commonwealth Bank of Australia, stated, “Markets are going to be jittery ahead of the announcement,” adding that currency movements in the lead-up will be driven by speculation surrounding the new tariff measures.
The U.S. dollar strengthened slightly against the Japanese yen, rising 0.19% to 149.92. The Australian dollar gained 0.26%, reaching $0.6295, while the New Zealand dollar saw a 0.31% increase to $0.57185, both rebounding from earlier losses this week.
Despite the uptick in the dollar’s value, the specifics of the tariffs remain unclear. Reports suggest the Trump administration is considering a broad approach, with duties on products from nearly every country expected to increase by approximately 20%, rather than targeting specific nations or sectors.
Chris Weston, head of research at Pepperstone, explained that while a blanket tariff rate of 20% could theoretically benefit the U.S. dollar, markets are more concerned with the potential for escalating stagflation risks in the U.S. economy.
Growing fears of an economic slowdown and weaker-than-expected U.S. economic data have fueled recession concerns, weakening the dollar earlier this year. The dollar rose modestly against a basket of currencies to 104.28 on Wednesday, but this follows a 3.1% drop in March—the greenback’s worst monthly performance since November 2022.
Tuesday’s data revealed a contraction in U.S. manufacturing for March, while inflation at the factory gate surged to its highest level in nearly three years, partly driven by heightened fears of tariffs on imported goods. Economists at Wells Fargo noted that the uncertainty surrounding tariff measures is pushing up prices while also dampening demand, leaving manufacturers anxious for more clarity.
Elsewhere, the Canadian dollar slipped 0.1% to C$1.4311, and the Mexican peso also weakened slightly to 20.3610 per dollar. Canadian Prime Minister Mark Carney engaged in talks with Mexican President Claudia Sheinbaum on Tuesday, emphasizing Canada’s plan to counter what it views as “unjustified trade actions” by the United States.
Meanwhile, Bank of Japan Governor Kazuo Ueda voiced concerns over the potential global impact of new U.S. tariffs, warning that such measures could significantly affect world trade and global economic growth.
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