The dollar was little changed on Thursday as President Donald Trump’s reciprocal tariffs took effect at midnight. While the greenback has attempted to regain momentum, the currency’s rise has faced numerous hiccups along the way.
The US Dollar Index (DXY), a gauge of the buck against a weighted basket of currencies like the British pound and Japanese yen, rose 0.05% to 98.22, from an opening of 98.18, at 13:53 GMT on Thursday.
Year-to-date, the DXY is down 9.5%. It is also on track for a weekly loss of nearly 2%.
Financial markets braced for the fallout from the president’s reciprocal tariffs against nearly 70 US trading partners.
“IT’S MIDNIGHT!!! BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!” Trump wrote on social media platform Truth Social.
Investors are also monitoring the president’s potential pick to replace Adriana Kugler on the Federal Reserve Board. Kugler abruptly resigned on August 1, and Trump said he has several candidates in mind.
As for Fed Chair Jerome Powell’s possible replacement next year, Trump has said there are four candidates in mind, including former Fed Governor Kevin Warsh and National Economic Council Director Kevin Hassett.
ING economists say that Warsh is the most friendly dollar candidate in the running to head the US central bank.
“He is generally considered more hawkish than the others, and in this May conversation with the Hoover Institute, he laid out a Friedman-style view of inflation as a strictly monetary phenomenon, and that restoring price stability is the Fed’s path back to credibility. We could see the dollar gain support on his nomination,” they said in a note.
On the data front, initial jobless claims rose by 7,000 to a higher-than-expected 226,000 for the week ending August 2. The four-week average, which removes week-to-week volatility, slipped to 2207,750.
Recurring jobless claims, which measure the number of individuals currently receiving unemployment benefits, surged to a higher-than-expected 1.974 million, the highest level in almost four years.
US Treasury yields were mixed on Thursday, with the benchmark ten-year yield flat at 4.23%. The two-year yield slipped below 3.71%, while the 30-year bond declined below 4.8%.
The USD/CAD currency pair climbed 0.07% to 1.3751, from an opening of 1.3742. The EUR/USD dropped 0.13% to 1.1646, from an opening of 1.1661.