The dollar index (DXY00) today is slightly higher, adding to Tuesday’s gain of +0.45%. The dollar is seeing support from a fresh US tariff threat and increased liquidity demand with today’s sell-off in stocks. In a bearish factor for the dollar, the 10-year T-note yield is currently trading slightly lower by -0.4 bp.
The dollar is seeing support from President Trump’s announcement of a new set of tariffs, which could be inflationary and hawkish for Fed policy. President Trump said last night that he will likely impose tariffs of around 25% on US auto, semiconductor, and pharmaceutical imports by April 2. Mr. Trump said the tariffs would be delayed until April 2 to give companies time to move production into the US so they would not be affected by the new import tariffs. These new tariffs would add to the previously announced 25% tariffs on steel and aluminum that take effect in March, and “reciprocal tariffs” on a country-by-country basis that will be calculated and take effect by April 1. Mr. Trump has also announced a 10% import tariff on US imports from China, and 25% tariffs on Canada and Mexico although those have been deferred until at least March 4.
