SINGAPORE — The US dollar rallied on Thursday in knee-jerk reaction to a court blocking President Donald Trump from imposing his import tariffs on other countries, providing some relief for the currency that has struggled this year due to trade uncertainty.
The Manhattan-based Court of International Trade said the US Constitution gives Congress exclusive authority to regulate commerce with other countries that is not overridden by the president’s emergency powers to safeguard the US economy.
In response, the Trump administration filed an appeal within minutes.
“It’s almost impossible to know if the tariffs will be completely unwound by this. But in the hypothetical situation that they are, it’s natural to see dollar appreciation,” said Yunosuke Ikeda, head of macro research at Nomura in Tokyo.
“Trump’s tariffs will lead to stagflation pressure on the US economy, so reversing those tariffs would be a positive for the dollar.”
US assets including the dollar, equities and longer-dated Treasury bonds have witnessed sharp declines in recent months as investors reassessed historic assumptions around the strength and outperformance of US markets as Trump’s erratic trade and tax policies sap confidence and spur inflation.
On Thursday, the dollar reversed some of those moves and rose 0.72 percent against the yen to 145.86 and 0.63 percent against the Swiss franc to 0.8326.
The euro slid 0.42 percent to $1.1245 and sterling fell 0.30 percent to $1.3432. That left the dollar index, which measures the US currency against six major peers, back above 100 for the first time in a week.
The index, though, is down 8 percent this year and analysts remain sceptical of a sustained dollar rally and expect a long court battle over tariffs.
