Dollar weighed by recession fears; sterling hit by weak outlook
The U.S. dollar traded in a steady fashion Tuesday, but remained near recent lows on elevated fears that the trade war will result in a U.S. recession, while sterling slumped amid U.K. growth fears.
At 03:55 ET (07:55 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded flat at 103.001, still down over 1% since the tariffs were announced.
Dollar remains fragile
The greenback has seen little relief of late from growing fears of a U.S. recession, with markets also upping bets that the Federal Reserve will cut interest rates earlier this year to offset the potential impact of U.S. President Donald Trump’s tariffs.
That said, currency markets remain fragile, with a lot of focus on equity markets as global shares have plummeted since Trump announced tariffs last week.
“The past couple of sessions have reinstated some sense of normality in FX correlations. If equities do find a bit of respite, the dollar could remain offered today,” said analysts at ING, in a note.
In Europe, GBP/USD traded 1% lower to 1.2763, near the recently hit one-month low, as traders have started to desert the U.K currency.
EUR/USD traded 0.1% higher to 1.0968, with the single currency not far from the six-month high it hit last week.
The European Union members are set to vote on their countermeasures against the U.S. tariffs on Wednesday.
The European Commission, which coordinates EU trade policy, has drawn up a list of U.S. imports valued at €21 billion and plans to narrow them down to €18 billion worth on which to impose tariffs.
In Asia, USD/JPY traded 0.1% higher to 147.14, as the Japanese yen retreated on Tuesday, but remained close to recent peaks as appetite for safe havens still persisted.
Source: Investing.com
