Dollar weakens

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TOKYO- The dollar drifted slightly lower on Wednesday in indecisive trading as a lack of clarity on President Donald Trump’s plans for tariffs kept financial markets guessing.

Trump said late Tuesday at the White House that his administration was discussing imposing a 10 percent tariff on goods imported from China on Feb. 1, the same day that he previously said Mexico and Canada would face levies of around 25 percent.

He also vowed duties on European imports without providing further details.

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Despite those threats, a lack of specific plans from Trump’s first day in office saw the dollar start the week with a 1.2 percent slide against a basket of major peers. It stabilized on Tuesday, ending flat after an attempted rebound fizzled, with US officials saying any new taxes would be imposed in a measured way.

The dollar index, which tracks the currency against the euro, yen and four other top rivals, was down 0.14 percent at 108.

The euro slipped 0.07 percent to $1.0420, while the yen edged up slightly to 155.40 per dollar

“While Trump threatened tariffs up to 25 percent on Mexico and Canada, he refrained from enacting them despite signing several executive orders,” said Tony Sycamore, an analyst at IG.

“His decision not to target China is being taken as a possible sign of a more cautious approach to tariffs than promised during his campaign, reducing inflation risks and potential hawkish Federal Reserve actions.”

Traders expect a quarter-point Fed interest rate cut by July, while another reduction by year-end is considered a coin toss.

Elsewhere, expectations have been growing that the Bank of Japan will raise rates by a quarter point on Friday, supporting the yen.

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