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Dollar Faces Monthly Loss Amid Tariff Concerns, Yen Gains on BOJ Rate Hike Hopes

Dollar Faces Monthly Loss Amid Tariff Concerns, Yen Gains on BOJ Rate Hike Hopes. Source: Photo by Pixabay

The dollar found safe-haven support ahead of U.S. President Donald Trump's upcoming tariffs, but it remains on track for a monthly loss as investors weigh the tariff threats against a weakening U.S. growth outlook. Meanwhile, the yen is poised to close the month with a 3.6% gain, its best performance since July, due to expectations of more Bank of Japan rate hikes this year. The yen recently edged up 0.04% to 149.65 per dollar after core inflation data from Tokyo showed signs of slowing in February.

Despite inflation pressures in Japan, Rodrigo Catril from National Australia Bank suggests that while normalization is likely, the BOJ will remain cautious in the current uncertain environment. In contrast, the risk-sensitive Australian dollar dipped to a three-week low at $0.62305, losing nearly 2% for the week, though it saw a slight 0.3% gain for the month.

The euro struggled at a two-week low of $1.0389, facing a 0.6% weekly decline but still managing a modest 0.36% monthly gain. The dollar briefly rose above the 7.30 level against the yuan, with the offshore yuan last standing at 7.2966.

Trump's announcement of 25% tariffs on Mexican and Canadian goods and an additional 10% duty on Chinese imports has spooked markets, increasing risk aversion. The greenback hovers near a one-week high against a basket of currencies, with the dollar index at 107.24, but it’s set for a 1.1% monthly loss due to weaker-than-expected economic data and growing concerns over U.S. growth. The pound edged up to $1.2607, supported by expectations of fewer rate cuts from the Bank of England.

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