The US dollar retreated further on Friday, trading at a four-month low as investors worry about the impact of trade policy uncertainty on the world’s largest economy. At 05:00 ET, the Dollar Index fell 0.4% to 103.605, its weakest level since late October.
Uncertainty over US President Donald Trump’s trade policies has been a major factor in the dollar’s decline over the past month. On Thursday, Trump exempted imports from Canada and Mexico from his 25% tariffs for a month, adding to market volatility. Analysts at ING warned that the new tariff policy is “damaging confidence and impacting activity.”
The US economy’s outlook was also clouded by Atlanta Federal Reserve President Raphael Bostic’s comments on Thursday, who said Trump’s policies were affecting the economy’s outlook and could underpin inflation.
Attention now turns to the release of nonfarm payrolls data for February, which will provide more cues on the economy. A soft number could further weaken the dollar.
In contrast, the euro saw a hefty weekly jump, climbing to its highest level since November as the German government loosened its fiscal rules. The European Central Bank also cut interest rates for the sixth time in nine months, but revised higher its near-term inflation forecast, potentially impacting future cuts.
The yen hit a five-month high on Friday, boosted by increased safe haven demand and speculation over interest rate hikes by the Bank of Japan. Meanwhile, sterling rose 0.5% to 1.2941 as investors took advantage of the dollar’s weakness.
US-China trade tensions also continued to weigh on markets, with China’s exports growing at a slower-than-expected pace in the January-February period. However, China’s trade surplus remained strong despite Trump’s increased tariffs.
Source: https://www.investing.com/news/forex-news/dollar-falls-to-fourmonth-low-on-economic-growth-concerns-3914330