The Dollar Ends a Volatile Week on a Strong Note, Supported by Trump’s Tariff Plans:
The U.S. dollar experienced a highly volatile week but ended
with strong performance amid renewed global trade tensions.
This surge came after President Donald Trump announced new plans
to impose tariffs on countries restricting U.S. exports, reigniting market uncertainty.
In this report, we will examine the key factors that drove the dollar’s rise,
how global currencies and emerging markets have been affected by trade war developments,
and investor trends in response to these updates.
Contents
A New Reality in the Trade War
Increased Demand for the Dollar
Dollar Performance
The U.S. dollar ended a volatile week with strong performance,
benefiting from renewed uncertainty over President Donald Trump’s intentions to impose new tariffs.
The rise followed Trump’s remarks,
in which he indicated his plans to announce similar tariffs
on countries that impose restrictions on U.S. exports without specifying which countries would be targeted.
The Bloomberg Dollar Spot Index rose by 0.4%,
while global currencies weakened against the U.S. dollar.
Although the dollar faced pressure after Canada and Mexico announced
a one-month delay in imposing tariffs,
it managed to recover some of its earlier losses.
According to Brendan McKenna, a strategist at Wells Fargo in New York:
“We are in a period where tariffs-related statements and headlines will directly impact the markets.”
Dollar vs. Major Currencies
Most major currencies from the Group of Ten (G10) weakened against the dollar.
The Japanese yen lost its gains during the session after Trump stated
that imposing tariffs on Japan was still an option.
Meanwhile, the euro and Swiss franc led the decline among global currencies.
Eastern European currencies and the Brazilian real were among the biggest losers in emerging markets.
At the same time, the stock index of emerging markets is
primarily focused on Asia.
It trimmed its gains following news of potential tariffs
but remained on track to post its fourth consecutive weekly increase.
Jordan Rochester, head of fixed income and currency strategy at Mizuho Bank, commented:
“The term ‘similarly’ carries a specific implication, but we know that Trump uses terms flexibly.
Anyone who thought tariffs wouldn’t be imposed until
Canada and Mexico’s grace period ended must now take short-term hedging measures.”
A New Reality in the Trade War
Traders faced a turbulent start to the week after the Trump
administration announced a 25% tariff on goods from Canada and Mexico,
only to retract the decision after both countries announced a one-month delay.
Meanwhile, the 10% tariffs on Chinese goods remain unchanged.
Increased Demand for the Dollar
Despite the volatility, demand for the U.S. dollar remains strong.
The Bloomberg Dollar Spot Index is trading 0.5% lower for the week but remains close to its highest since 2022.
The latest data from the Commodity Futures Trading Commission (CFTC)
speculators hold long positions worth up to $33.7 billion, nearing the dollar’s peak in 2019.
Win Thin, Head of Global Market Strategy at Brown Brothers Harriman & Co., stated:
“Trump is delivering on all his promises, which will continue to support the strength of the U.S. dollar moving forward.”
Conclusion
The dollar ended a volatile week with strong performance,
driven by Donald Trump’s comments on imposing new tariffs.
While markets remain uncertain,
investors continue to turn to the greenback as a haven,
reinforcing the dollar’s strength despite market fluctuations.
The Dollar Ends a Volatile Week on a Strong Note