Dollar Recovers as Trump Talks Canadian, Mexican Tariffs
The US dollar recovered some of its losses on Wednesday, after a tumultuous day of trading, as investors digested comments from President Donald Trump regarding potential tariffs on Canada and Mexico.
The dollar index, which tracks the currency against a basket of six major currencies, rose 0.2% to 97.35, after falling as low as 96.85 earlier in the day. The greenback had been under pressure in recent days due to concerns over the ongoing trade tensions between the US and its major trading partners.
Trump’s comments, made during a press conference at the White House, seemed to ease some of those concerns. The President said that he was considering imposing tariffs on Canadian and Mexican goods, but also expressed optimism that a deal could be reached with both countries.
"We’re going to put tariffs on Canada, we’re going to put tariffs on Mexico," Trump said. "But I think we’re going to make a deal. I think we’re going to make a great deal."
The comments were seen as a positive development by investors, who had been worried that the US would impose tariffs on its northern and southern neighbors. The dollar’s recovery was also supported by a stronger-than-expected reading on US consumer confidence, which rose to 125.6 in July from 121.7 in June.
The dollar’s gains were also driven by a decline in the euro, which fell 0.3% to $1.1245. The single currency had been boosted earlier in the day by comments from European Central Bank President Mario Draghi, who said that the bank was prepared to take further action to support the eurozone economy.
The dollar’s recovery was also supported by a stronger-than-expected reading on US consumer confidence, which rose to 125.6 in July from 121.7 in June. The data was seen as a positive sign for the US economy, which has been growing steadily in recent months.
Despite the dollar’s gains, many investors remain cautious about the currency’s prospects in the coming weeks. The US-China trade war continues to weigh on the global economy, and many analysts believe that the dollar will remain under pressure until a deal is reached between the two countries.
"The dollar is likely to remain volatile in the coming weeks, as investors continue to weigh the risks and rewards of the US-China trade war," said Kathy Lien, a currency strategist at BK Asset Management. "While the dollar’s recovery today was a positive sign, we still believe that the currency will struggle to make significant gains until a deal is reached between the US and China."
