Dollar Tumbles on Potential Trump Holds Off on Immediate Tariffs
The dollar fell as Donald Trump was sworn in as US president, with traders betting that he’d hold off on implementing aggressive tariffs immediately after his Inauguration.
The Bloomberg Dollar Spot Index sank 1.1%, the most in 14 months, on Monday as most other US financial markets were closed for a holiday. The bulk of the move came early in the session after a Wall Street Journal reported Trump would stop short of imposing new tariffs on his first day in office.
“Markets are breathing a collective sigh of relief that Trump won’t start his presidency with aggressive tariffs that could rattle the markets once more,” said Valentin Marinov, head of G-10 FX strategy at Credit Agricole CIB.
The dollar’s weakness helped boost foreign currencies, pushing the euro up as much as 1.6% to $1.0434. The Canadian dollar, Chinese yuan and Mexican peso, which investors view as highly exposed to US tariffs, rallied at least 1% each. Earlier, the Mexican currency briefly pared its advance as Trump pledged to make immigration a key focus in his first hours in office, saying he would call a national emergency on the southern border and send troops.
Elsewhere, a gauge of emerging-market currencies closed 0.3% higher, the best day since September.
Source: Bloomberg
