Dollar drops as investors prepare for court battle on tariffs
The dollar fell on Thursday as investors prepared for U.S. President Donald Trump to battle a U.S. trade court ruling on Wednesday that blocked most of his proposed tariffs.
Senior Trump administration officials on Thursday downplayed the ruling's impact, expressing confidence it would be overturned on appeal and insisting other legal avenues are available in the interim.
The greenback had rallied on the ruling.
The U.S. currency has weakened on concerns that tariffs will slow the economy and reignite inflation, while the erratic implementation of Trump's policies is seen as denting the appeal of U.S. assets to foreign investors.
The Federal Reserve has kept interest rates on hold on concerns about higher inflation as Fed officials wait to see how the trade policies will affect the U.S. economy.
Trump, in a private meeting at the White House on Thursday, told Fed Chair Jerome Powell he was making a "mistake" by not lowering interest rates.
U.S. economic pessimism declined earlier this week after Trump on the weekend delayed a plan to impose 50% tariffs on European Union imports.
The euro was last up 0.73% at $1.1374 after falling to $1.1209, the lowest since May 19.
Against the Japanese yen , the dollar weakened 0.57% to 143.99. It earlier reached 146.28, the highest since May 15.
The dollar fell 0.59% to 0.822 Swiss franc .
The greenback also weakened on news that the number of Americans filing new applications for jobless benefits rose more than expected last week, and the unemployment rate appeared to have picked up in May, suggesting increasing layoffs as tariffs cloud the economic outlook.
Investors are also watching the progress of a tax cut and spending bill that is working its way through Congress and which is expected to add trillions in U.S. debt over the coming decade. Some Republicans have criticized it for not having enough spending cuts.
Trump's budget chief said on Wednesday the White House intends to send Congress a package next week to formalize cuts made by billionaire Elon Musk's team targeting federal government spending.
Longer-dated U.S. Treasury yields rose last week and demand for the Treasury's 20-year bond auction was soft due to rising concerns about the deteriorating U.S. fiscal outlook.
The yen also weakened against the greenback earlier this week on reports that Japan will consider trimming issuance of super-long bonds in the wake of recent sharp yield increases in the country.
Source : Reuters
