USD Pauses Amidst Tariff Uncertainty, Central Bank Decisions Loom
The US dollar remained steady against major currencies on Thursday, continuing its recent stagnation. Traders await more concrete announcements on tariffs from President Donald Trump.
Several central bank policy decisions are scheduled next week, including a highly anticipated interest rate hike by the Bank of Japan on Friday. The US Federal Reserve and European Central Bank are also expected to announce rate decisions next Wednesday and Thursday, respectively.
The dollar index, which tracks the currency's value against six major rivals, remained unchanged at 108.25 after two days of marginal gains. Earlier this week, the index fell 1.2% on Monday, its sharpest decline since November 2023.
Trump has hinted at levies on Canada, Mexico, and China, but has yet to provide specifics. "President Trump's approach to China has been less hostile than expected," said Carol Kong of Commonwealth Bank of Australia, citing "softer policies and tone on tariffs."
However, Kong cautioned that "risk sentiment remains fragile and can quickly deteriorate" if Trump adopts a more aggressive stance.
The Chinese yuan remained stable at 7.2812 per dollar in offshore trading. The Japanese yen gained slightly to 156.40, reflecting market expectations of a quarter-point rate hike on Friday.
The euro held steady at $1.0411. The ECB is expected to cut its benchmark rate next week. The Canadian dollar remained unchanged at C$1.4386, with the Bank of Canada expected to reduce rates next Wednesday. The Mexican peso also showed little change at 20.47 against the US dollar.