The dollar lost ground on Tuesday following yesterday’s news that President-elect Donald Trump would delay imposing trade tariffs immediately after his inauguration, an expectation that had boosted the U.S. currency following his victory in the November election.
In today’s trading, the dollar index, which analyzes the U.S. currency against a basket of six other currencies, was trading about 1.1% lower, after rising the previous week from more than two-year highs.
The Wall Street Journal reported Monday that Trump plans to issue a lengthy memo at his inauguration directing federal agencies to analyze trade policies and look at U.S. trade relations with China along with the U.S.’s continental neighbors, though he stops short of imposing new tariffs on his first day as U.S. president.
The dollar has gained about 4% since the presidential election made in November as traders anticipate that Trump’s policies are going to be inflationary, necessitating higher interest rates for a longer period.
“Financial markets are on edge to see what executive orders newly elected U.S. President Donald Trump will enact on his first day,” mentioned analysts at ING, in a note.
“Currency markets are more interested in what he has to say about tariffs and what kind of pain the Oval Office plans to inflict on major trading partners.”
