(Bloomberg) -- The dollar traded weaker but trimmed losses after President-elect Donald Trump said he isn’t paring back his tariff plans, denying an earlier story by the Washington Post that said aides were considering a more targeted policy.
- The Canadian dollar advanced as Canadian Prime Minister Justin Trudeau announced his resignation as head of the Liberal Party, triggering a contest to replace him.
- Bloomberg Dollar Spot Index fell as much as 1% in the aftermath of the Washington Post report but later curbed the fall to 0.6%
- “While Trump’s tariff policies remain uncertain, the core fundamentals of a relative economic strength in the US will remain, which will positively influence the USD,” said Yusuke Miyairi, a currency strategist at Nomura International Plc. “We rather think the USD will strengthen against most currencies in 2025”
- “The USD was priced to perfection on the Trump agenda, most notably tariffs. This is a smoky distraction in currency markets,” said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi US Inc. “Beyond tariff concern, the backdrop remains unequivocally bullish for the USD—US growth exceptionalism continues, Fed moving to a pause in its rate cutting cycle in sharp contrast to many G-10 central banks that will continue to ease and Trump fiscal agenda that remains accommodative”
- “I would look past the smoke that can distract markets from time to time,” he said
- AUD/USD rose 0.4% to 0.6241
- Leveraged funds boosted bets against the Australian dollar to reflect the most-bearish positioning since March of 2022, according to Commodity Futures Trading Commission data for the week ended Dec. 31
- READ: Hedge Funds Turn Most Aussie Bearish in About Three Years: CFTC
- USD/CAD fell as much as 1.2% to 1.4280, later curbing the move
- “There seems to be some optimism that perhaps the next PM could be better-suited to lead the nation through the potential impacts of the Trump administration,” said Helen Given, a foreign-exchange trader at Monex. “Trump’s chatter on tariffs this morning is keeping CAD’s rebound tamped down, and a lot depends on the path forward for the Canadian government, but all in all the initial reaction looks to be positive for the loonie”
- READ: Loonie Gains as Canada’s Trudeau Resigns: Wall Street Reacts
- USD/JPY rose 0.2% to 157.61; the yen was the only currency weakening against the US dollar in the Group of 10
- EUR/USD advanced 0.8% to 1.0388 after a regional German CPI print signaled an acceleration in price growth, spurring traders to dial back bets on European Central Bank interest-rate cuts this year
Reporting by Anya Andrianova and Catherine Bosley
