New York: The United States (US) dollar weakened in Monday’s local trading (Tuesday morning WIB) in uncertain trading after conflicting reports about how President-elect Donald Trump’s aggressive tariff plans could occur when he takes office.
Citing from Yahoo Finance data, Tuesday, January 7, 2025, the dollar index, which measures the greenback against a basket of currencies, fell 0.64 percent to 108.26, with the euro up 0.76 percent at USD1.0386.
The dollar is on pace for its biggest daily percentage decline since November 27 with the euro poised for its biggest daily gain since August 2.
The dollar plunged after the Washington Post reported that Trump aides were exploring a plan that would impose tariffs on every country, but only on sectors deemed critical to U.S. national security or the economy, easing concerns about tougher and broader tariffs.
The dollar later pared its sharp decline after Trump denied the report in a post on his Truth Social platform.
The dollar index hit a two-year high of 109.54 last week on its way to a fifth straight weekly gain, as a resilient economy, the potential for higher inflation from tariffs and a slower pace of interest rate cuts by the Federal Reserve have supported the greenback.
The Chinese yuan, meanwhile, strengthened 0.16 percent against the U.S. dollar to 7.348 per dollar. The dollar hit a 26-month high against the currency last week as China is seen as one of Trump’s top tariff targets.
Congratulations on Fed comments
Comments from Fed Chair Lisa Cook also helped the dollar pare losses, suggesting the Fed could afford to be cautious with further interest rate cuts given the economy is on solid footing and inflation is higher than expected.
A range of Fed policymakers are scheduled to speak this week, and are likely to echo recent comments from other Fed officials that there is still a need to combat stubborn inflation.
The euro, which hit its lowest level since November 2022 last week, gained after German annual inflation rose more than expected in December, preliminary data showed.
U.S. economic data showed new orders for U.S. manufactured goods fell in November, while business spending on equipment appeared to slow in the fourth quarter.