| Company | Value | Change | %Change |
|---|
The Bloomberg Dollar Spot Index fell as much as 0.4% in early Asia trading Tuesday, after Bloomberg reported that Trump’s economic advisors are discussing a slow and steady approach to tariffs, rather than a large one-time increase. The move could slow inflationary pressure from tariffs, and potentially give more breathing room for the Federal Reserve to reduce interest rates.
It was the biggest drop in the dollar index since January 6, when the greenback fell following a Washington Post story that claimed Trump was planning to pare back his tariff plans. The president-elect denied that story in a post on Truth Social.
“Dollar weakness can be sustained unless President Trump denies the reporting like he did in reaction to the report by the Washington Post,” said Carol Kong, a strategist at Commonwealth Bank of Australia.
Risk-sensitive currencies like the Australian and kiwi dollars jumped against the greenback, pointing to a sense of relief that a large tariff shock may be avoided. China’s offshore yuan, a prime selling target for traders betting on US tariffs, also advanced.
The dollar’s drop underscores the key role tariffs play in swaying sentiment across the $7.5 trillion-a-day foreign-exchange market. But the move may prove temporary: Most Wall Street banks expect the greenback to strengthen, and blowout employment numbers last week have raised further questions about the pace of potential rate cuts.
“You can’t chase this thing, as a denial will be coming soon,” said Win Thin, global head of currency strategy at Brown Brothers Harriman & Co. in New York said of the recent headlines. “Look through the noise and rest assured the dollar rally will continue on the US economic outperformance alone.”
