The US Dollar strengthened above an 11-week low on Thursday, driven by ambiguous commitments from US President Donald Trump regarding tariffs on Europe and additional delays in tariffs for Canada and Mexico, which fuelled uncertainty.
Meanwhile, the Euro pulled back from the one-month high of $1.0529 reached in the previous session, as traders adopted a cautious stance following Trump’s suggestion on Wednesday of a potential 25% “reciprocal” tariff on European cars and other products.
Trump also mentioned that the 25% tariffs on Mexican and Canadian goods might be implemented on 2nd April, instead of the previously set deadline of 4th March, Reuters reports.
However, a White House official stated that the tariffs on goods from Mexico and Canada are still in effect “as of this moment,” awaiting Trump’s assessment of both countries' efforts to secure their borders and stop the flow of migrants and the opioid fentanyl into the United States.
The uncertainty kept currencies mostly within their recent ranges, with the Canadian Dollar remaining under pressure near a two-week low against the US. Dollar, while the Mexican Peso hovered around 20.423 after briefly rising to 20.286 following Trump’s comments.
The Euro dropped 0.17% to $1.0467, as investors also waited for updates on the German conservatives' efforts to form a coalition government after their election win.
Matt Simpson, senior market analyst at City Index, noted that markets seemed to be awaiting a more significant catalyst, as Trump's “mixed messaging” was not enough to provide clear direction.
“We know that Trump can say what he wants when he wants, and only some of his threats come to fruition, which is likely why currency traders took his latest comments within stride,” he stated.
Global trade concerns pushed the US Dollar further away from the more than two-month low of 106.12 reached on Monday. However, it remained nearly 4% lower than the more than two-year high seen in January, as the fluctuating tariff messages raised concerns about both US economic growth and inflation.
The Dollar index, which tracks the US currency against six major rivals, gained 0.2% to reach 106.66, ahead of the release of the second estimate of US GDP for Q4 later in the day.
Elsewhere, the Australian and New Zealand Dollars, both highly sensitive to the potential risks of a global trade war, reached their lowest levels in two weeks.
The British Pound also slipped further below Wednesday's more than two-month high of $1.2717, last trading at $1.2658.
Meanwhile, the US Dollar was up 0.14% at 149.34 against the Yen, although it remained close to its weakest level against the Japanese currency since early December.