US dollar hits three-month low after US inflation, growth concerns outweigh potential boost from tariffs | Stock Market News
Source: Live Mint
The US dollar fell to a three-month low on Tuesday as concerns about slowing growth and the impact of tariffs on the US economy outweighed any potential boost from the ramping up levies on Canada, Mexico and China. US President Donald Trump’s new 25 per cent tariffs on goods from Mexico and Canada took effect, along with a doubling of duties on Chinese goods to 20 per cent.
In response, China said it would impose additional 10-15 per cent tariffs on certain US imports starting on March 10. Canada has said retaliatory tariffs on the United States will take effect on Tuesday, and Mexico is expected to follow suit.
Worries about a trade war and the hit to other countries’ economies might be expected to boost the US dollar, but recent weak economic data has weighed on the currency and bond yields in the US. The US dollar index, which tracks the currency against six peers, dropped 0.54 per cent to 105.96, its lowest since December.
Investors flocked to traditional safe-haven currencies, the Japanese yen and Swiss franc, which were up almost one per cent, as growth and tariff fears knocked global stocks on Tuesday. The Canadian dollar was around 0.45 per cent stronger at 1.4471 per US dollar, hitting a one-month low of 1.4542 late Monday as tariffs were confirmed.
The Mexican peso was last down roughly 0.3 per cent at 20.76 per dollar, after earlier touching its lowest since February 3. Analysts said many participants in the market hoped tariffs might be quickly lifted if deals could be struck, as the initial threat of levies against Canada and Mexico was halted in February.
US dollar against Euro, Sterling, and Yen
The euro perked up, reflecting the lack of tariffs on the European Union and a sharp narrowing of the gap between US and eurozone bond yields, making the dollar less attractive. It climbed to its highest since December at $1.0547, up 0.5 per cent.
Euro zone government bond yields have risen relative to those in the United States as Trump’s pullback from supporting Ukraine has stirred expectations of higher borrowing and spending on defence. Yields move inversely to prices.
US 10-year Treasury yields fell to 4.115 per cent on Tuesday, their lowest level since October, as traders digested the tariff headlines. Sterling rose to an 11-week high of $1.2744. The dollar fell 0.9 per cent against the yen to 148.17, its lowest since October. China’s yuan rose 0.3 per cent to 7.265 per dollar, aided by the central bank continuing a strengthening bias in its daily official guidance.
