[SINGAPORE] The dollar slipped and other currencies held in tight ranges on Wednesday (Apr 2) as traders awaited details of US President Donald Trump’s plans for tariffs, which could upend the global trading system and shake financial markets.
The euro last bought US$1.0802, while sterling fetched US$1.2941, both rising a touch ahead of a White House Rose Garden announcement scheduled for 2000 GMT that will likely see the imposition of steep new duties on US imports.
Trump has for weeks trumpeted April 2 as “Liberation Day”, and White House spokeswoman Karoline Leavitt said reciprocal tariffs on countries that impose duties on US goods would take effect immediately after Trump’s announcement.
“Markets are going to be jittery ahead of the announcement,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
“Sentiment is going to be driven by any further tariff headlines and in turn that will drive currency moves ahead of the big announcement.”
Against the yen, the dollar fell 0.3 per cent to 149.24 as investors moved modestly into the safe-haven Japanese currency.
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The Australian dollar was up 0.44 per cent at US$0.6306, potentially boosted by investors seeking out currencies that are less exposed to tariffs.
Details about the size and scope of the trade barriers set to come into force remain unknown, but the Washington Post reported that Trump’s aides were considering a plan that would raise duties on products by about 20 per cent from nearly every country, rather than targeting certain countries or products.
“A wide blanket tariff globally capturing all the major trading partners with a 20 per cent-25 per cent tariff would be seen as most aggressive and likely elicit the biggest risk-off reaction,” said Derek Halpenny, head of research at MUFG.
“But there has been speculation that discussions on trade deals could exclude certain countries … and the more examples of that, the better the markets can take the announcements,” he said, citing Britain as one country that may get a carve-out.
Worries about the impact of an escalating global trade war on the world’s largest economy and a slew of weaker than expected US data have stoked recession fears and in turn undermined the dollar this year.
The dollar fell 0.1 per cent against a basket of currencies to 104.08 on Wednesday. That comes after the greenback dropped 3.1 per cent in March, its worst monthly performance since November 2022.
Data on Tuesday showed US manufacturing contracted in March, while a measure of inflation at the factory gate jumped to the highest level in nearly three years amid rising anxiety over import tariffs.
“While a 20 per cent blanket tariff rate would be theoretically seen as a net positive for the US dollar, the market is most intently focused on whether tariffs accelerate the stagflation risk in the US economy,” said Chris Weston, head of research at Pepperstone.
Elsewhere, the Canadian dollar slipped a touch to C$1.4323 per US dollar, while the Mexican peso was broadly flat at 20.36 per dollar.
Canadian Prime Minister Mark Carney spoke with Mexican President Claudia Sheinbaum on Tuesday about Canada’s plan to “fight unjustified trade actions” by the United States, the prime minister’s office said.
Bank of Japan Governor Kazuo Ueda meanwhile said on Wednesday that planned new US tariffs could have a huge impact on world trade, warning of a possible hit to global growth. REUTERS
