Trump announces 100% chip tariff as Apple ups U.S. investment
Investing.com - The U.S. dollar edged higher Friday after U.S. President Donald Trump’s latest tariff announcements prompted moves into this safe haven, while weak growth data hit sterling.
At 04:55 ET (08:55 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, rose 0.2% to 97.500, and is on course for a weekly gain of around 0.6%.
Dollar gains on safe haven flows
Trump late Thursday announced a 35% tariff rate on all imports from Canada from August 1 and planned to impose blanket tariffs of 15% or 20% on most other trading partners.
This followed the U.S. president sending letters dictating new U.S. tariff rates to a variety of countries earlier this week.
While the dollar has gained this week, the general market reaction to these new tariffs has been more muted than after "Liberation Day" in April, but traders remain on tenterhooks.
USD/CAD rose 0.3% to 1.3699, following a knee-jerk fall of more than 0.5% overnight.
Away from the uncertainty surrounding trade policies, the greenback remains highly sensitive to economic data as traders try to assess the Federal Reserve’s likely easing path.
“Yesterday’s fifth straight decline in initial jobless claims has reinforced the narrative that a sharp deterioration in the jobs market is unlikely to be what prompts the Federal Reserve to cut as soon as September. This puts even more emphasis on inflation data, due Tuesday,” said analysts at ING, in a note.
Sterling hit by weak GDP data
In Europe, EUR/USD fell 0.2% to 1.1685, with the single currency on track for a weekly loss of around 0.8%.
Trump’s announcement of tariffs on Canadian imports has raised the question whether the European Union will be the next to receive a letter on tariff rates, throwing into question the progress of the bloc’s trade talks with Washington.
On the economic data front, consumer price inflation in France rose to 0.9% in June, slightly above the preliminary reading of 0.8%.
This followed German inflation easing to 2.0% in June, suggesting the European Central Bank has plenty of room to cut monetary policy further, probably in September, to boost the region’s economy.
“EUR/USD briefly dipped as low as 1.1670 yesterday, and while near-term risks look more balanced, if anything slightly skewed to the downside, the lack of fresh data suggests the pair may remain anchored around 1.170 for now.”
GBP/USD dropped 0.3% to 1.3532, on track for a weekly loss of around 1%, after Britain’s economy contracted unexpectedly for a second month running in May.
Data released earlier Friday by the Office for National Statistics showed that U.K. gross domestic product fell by 0.1% in May on a monthly basis, following a contraction of 0.3% in April, which was the biggest decline since October 2023.
“We’ll get more colour in next Thursday’s jobs report, and if things are bad, it would put serious pressure on the BoE to speed things up on rate cuts,” said ING.
Yen heading for sharp weekly loss
Elsewhere, USD/JPY rose 0.4% to 146.90, with the Japanese yen set to decline 1.7% this week as investors weighed a flurry of trade tariff announcements from Trump and braced for further actions.
USD/CNY edged 0.1% lower to 7.1709, while AUD/USD pair gained 0.1% 0.6577, and headed for a weekly rise as the Reserve Bank of Australia held interest rates steady this week in a surprise move.