Investing.com – The US dollar moved lower on Wednesday amid uncertainty over President Donald Trump's plans for tariffs, while sterling fell on disappointing government borrowing data.
At 04:45 ET (09:45 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 107.755, after a slide of more than 1% at the beginning of the week.
Dollar slips on tariff uncertainty
The dollar remained on the back foot as traders tried to gauge the full extent of President Donald Trump's plans for tariffs, and the potential pain of the new administration's plans on major trading partners.
Trump said late Tuesday that his administration was considering imposing a 10% tariff on goods imported from China on February 1, the same day he said Mexico and Canada would face tariffs of around 25 %.
He also pointed out that Europe would also suffer from imposing duties on European imports, but has stopped short of implementing those tariffs despite signing a handful of executive orders after his inauguration on Monday.
“Data will play a secondary role this week as all attention will be on Trump's first executive orders,” analysts at ING said in a note. “Apparently, the Federal Reserve is in the quiet period ahead of next Wednesday's meeting. Expect a lot of 'head trading' and short-term noise, with risks still going for a stronger dollar.”
Sterling falls after retail sales decline
In Europe, it traded 0.1% lower to 1.2349, after data showed Britain ran a bigger-than-expected budget deficit in December, lifted in part by rising debt interest costs.
There were £17.8 billion pounds in December, more than £10 billion higher than a year earlier, the Office for National Statistics said on Wednesday.
Rising UK government bond yields have increased the cost of servicing the country's debt, which could lead to the new Labor government needing to cut government spending to meet its fiscal rules.
edged higher to 1.0429, but the single currency remains broadly weak with the European Central Bank widely expected to cut interest rates more regularly this year than its main rivals, the Federal Reserve and the Bank of England.
This is seen to cut interest rates four times in the next six months, with next week's cut largely expected as a done deal.
“The direction is very clear,” ECB President Christine Lagarde told CNBC in Davos about interest rates. “The pace we see depends on data, but a gradual move is definitely something that will come.” to mind right now.”
The BOJ meeting is big
In Asia, it fell 0.1% to 155.69, ahead of the Bank of Japan's two-day policy meeting later this week.
He is widely expected to raise interest rates on Friday, and could repeat his commitment to further rate hikes if the economy continues to shrink.
traded largely unchanged at 7.2715, with the Chinese currency remaining weak after Trump said he is considering imposing 10% tariffs on Chinese imports from February 1.
