Dollar Suffers from Trump’s Metal Tariff
The dollar plunged overnight in Asia from six-week highs after U.S. President Donald Trump decided to tax steel and aluminum as high as 25% and 10% respectively and Powell delivered a less upbeat testimony at the Senate panel. The Aussie and the yen appreciated as the dollar was off the recovery track.
The U.S. dollar index that tracks the greenback against a basket of six major currencies was last quoted at 90.16 at 9:10pm ET, down 0.07%.
The tariff decision from Trump triggered market fear of a potential trade war with China. The dollar had been recovering to climb above the 90 handle following a hawkish tone from Federal Reserve’s new chief Powell that hinted faster rate hikes or even a fourth hike, but the White House’s decision stopped the momentum. The dollar started to dip a couple of hours before the tariff news, as Powell’s second appearance, this time at Sentate Banking Committee where he said “no strong evidence of a decisive move up in wages”, made investors drop bet on further rate hikes.
The dollar was quoted against the yen 0.19% lower at 106.01. The USD/JPY pair changed hands this morning as the dollar was dragged down by Trump’s tariff policy and the yen got boosted by an unemployment rate of 2.4% - near 25-year low – versus the estimated 2.8%. In addition, The Bank of Japan is still focusing on achieving the 2 percent inflation rate. Its governor Haruhiko Kuroda said “easing won’t continue if CPI is 2% in a stable manner”.
The AUD/USD pair also changed hands to trade 0.04% higher at 0.7758. The Aussie witnessed a mild relief rally along the yen in Asia this morning.
Elsewhere, the People’s Republic Bank of China set the yuan’s fix rate against the dollar at 6.3334, versus yesterday’s rate of 6.3294. The USD/CNY pair traded at 6.3465, down 0.16%. Focus in China next week will be on the National People’s Congress