Investing.com – The US dollar rose slightly on Thursday, but remained in a tight trading range ahead of a speech by President Donald Trump at the World Economic Forum.
At 04:15 ET (09:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.2% higher at 108.150, after starting on the week with a fall of more than 1%.
Dollar runs water
The dollar has been largely above water over the past couple of days as traders await more clarity on President Donald Trump's plans for tariffs, after the fell sharply on Monday as his first day in office brought a ban on executive orders, but none on taxes.
After that he has talked about tariffs of about 25% on Canada and Mexico and 10% on China from February 1, as well as referring to duties on European imports, but without concrete action.
Trump will speak later in the session at the World Economic Forum in Davos, Switzerland, and traders are eagerly awaiting any comments on this topic as well as his positions on key geopolitical and economic issues such as the Ukraine-Russia war and the economic conflict with China.
“This week's dollar correction has not gone too far. Despite the heavy one-way position of the dollar, investors lack clarity on the timing of Trump's tariff threats, preventing them from reducing dollar holdings,” said analysts at ING, in a note.
Also making traders pause for breath is the number of central bank policy decisions due over the next week, including Friday, ahead of next week and the week after.
Euro lower ahead of ECB meeting
In Europe, it slipped 0.1% lower to 1.0404, with the single currency weak ahead of next week's ECB meeting, with an interest rate cut largely seen as a done deal.
“The EUR/USD bounce this week has been very quiet so far,” ING said. “There is no way investors can expect to hear a 'clear' signal on taxes. And keeping trading partners out of balance is a tactic that kept the dollar reasonably strong during Trump's last tariff regime in 2018-19.
traded 0.1% lower to 1.2304, and rose 0.2% to 11.3035 ahead of a policy setting meeting later in the session.
“Norges Bank is widely expected to hold rates today,” ING said. “Overall, the key variables that NB have analyzed do not clearly argue that a rate cut should be pushed beyond March. Also, the risks to global growth associated with Trump's protectionist plans should encourage policymakers to allow some breathing room with a rate cut before the end of the first quarter. “
BOJ meeting ends on Friday
In Asia, it traded largely unchanged at 156.47, ahead of the Bank of Japan's two-day policy meeting, which ends on Friday.
The BoJ is widely expected to raise interest rates as recent inflation and wage data have been encouraging, and the central bank is likely to signal an increase in interest rates if the economy continues to gain back.
traded 0.2% higher to 7.2877, with the Chinese currency weaker on fears that Trump will confirm US tariffs on Chinese imports, hitting the world's second-largest economy.
