NEW YORK- The dollar weakened on Friday on growth concerns ahead of a planned announcement next week by US President Donald Trump on reciprocal tariffs, with the Japanese yen benefiting from safe haven flows as stocks tumbled and Treasury yields fell.
Traders have had bouts of optimism that the trade levies will not be as severe as feared, but concerns remain that they will dent economic growth and reignite inflation.
The lack of clarity over what tariffs exactly will be implemented has added to investor caution.
“The one word that I keep hearing over and over from clients, and on earnings calls and things, is uncertainty. And you hear this from the central bankers as well,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
“The one thing we do know is that on April 2, we’re going to get reciprocal tariffs. We don’t know exactly what that means,” Chandler said.
Trump on Wednesday announced a 25 percent tariff on imported cars and light trucks starting on April 3.
“We see balanced risks going into next week’s deadline. We believe tariffs on selective products are already what markets expect. Across-the-board tariffs would be a negative surprise,” Bank of America FX analysts Athanasios Vamvakidis and Claudio Piron said in a report.
“However, we would not expect sustained USD strength in this case, as markets remain concerned about the US economy slowing. Implementation of new tariffs could also take time, because of difficult logistics, which would leave room for negotiations,” they said.
The US currency also dipped on Friday after data showed that core inflation rose 0.4 percent in February, more than expected, adding to fears of stagflation.
