US dollar experiences worst trading week in 18 months
Date
1/26/2025 2:19:47 AM
(MENAFN) The US dollar experienced its worst trading week in 18 months as currency traders faced uncertainty amid President Donald Trump's ongoing tariff rhetoric, which has yet to translate into concrete actions. The Bloomberg Dollar Spot Index dropped by 1.7 percent since last Friday’s close, marking its largest weekly decline since July 2023, when the Federal Reserve concluded its tightening cycle. The dollar's decline deepened late Monday after Trump appeared more open to negotiations on imposing tariffs on China.
Trump’s repeated threats against key US trading partners, including Canada and Mexico, have unsettled markets. However, no immediate executive orders have been issued to implement specific tariffs. Instead, the President has directed the Treasury and Commerce departments to analyze existing trade relationships and submit their findings by April 1.
Matthew Hornbach, head of macro strategy at Morgan Stanley, explained that investors had been hesitant to sell the dollar before Trump’s inauguration, fearing he might impose tariffs right away. Now, with no immediate action taken, traders feel more confident in responding to market signals.
Hornbach added that as more time passes during President Trump’s second term, investors are likely to grow increasingly comfortable voicing their views. He noted that many believe the dollar is overvalued and interest rates are high, both of which he expects to begin correcting in the near future.
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