Stocks stand still as Trump comments rock Wall Street, but winning week ends

The U.S. dollar ( DX=F , DX-Y.NYB ) retreated from a near two-year high on Friday, falling to a one-month low after President Trump said he would not impose tariffs “unless we impose” on China.

The US dollar index, which measures the dollar’s value against a basket of six foreign currencies – the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc – is tracking its worst week in more than a year.

The recent push for the US dollar has been largely driven by two main factors: the election of Trump and the Republican re-election in the face of strong economic data, along with a possible rebalancing of the Fed.

But the uncertainty surrounding Trump’s tariff policy has been the biggest driver in recent weeks and looks set to continue that way in the coming months.

Despite recent moves to the downside, Bank of America analysts argue that it is prudent for the market to be bullish on tariff concerns when it comes to the dollar.

“Tariffs are likely to be a key policy pillar for the new administration despite delays,” wrote Adarsh ​​Sinha, chief FX and rate strategist. “Furthermore, uncertainty remains over the timing of the rate hike.”

Capital Economics, on the other hand, expects the dollar index to rise further this year, when adjusted for inflation, noting that the greenback is at its strongest level since the signing of the pro-growth international agreement. Plaza Accord, In 1985

“We think changes in U.S. tariff policy and interest rates could boost the dollar in the coming quarters,” wrote Simon McAdam, deputy director of global economics at Capital Economics.

Trump refused to issue a tariff order on his first day in office. Taking notes On Monday, he instructed federal agencies to review US trade policy.

But as Yahoo Finance’s Ben Vershkull reports, Trump’s first week in office has seen a range of new tariff threats from Russia to EU members. First, Trump said that 25% tariffs on Canada and Mexico and 10% tariffs on China would be implemented as of February 1.

Kyle Chapman, FX market analyst at Billinger Group, wrote in an email on Monday that the lack of a one-day blanket rate “is the biggest indication that we’re going to be high dollar, although I haven’t gotten my hopes up yet.”