On Thursday, the dollar slightly declined amidst volatile trading, with the dollar index dropping by 0.19% to 108.00. On the same day, U.S. President Trump delivered a speech at the Davos Forum in Switzerland, urging global central banks to lower interest rates. However, he did not provide a clear stance on the highly anticipated tariff plans, which continued to increase market uncertainty.
In his speech, Trump emphasized that companies opting to produce outside the U.S. might face the threat of tariffs, but he did not disclose a specific timeline or details regarding the tariffs. Investors are keeping a wait-and-see attitude, leading to the dollar's overall decline of over 1% this week. Monday recorded the largest drop at 1.2%, marking the largest single-day decline since November 2023. This trend is mainly attributed to market disappointment over Trump's failure to implement tariff measures immediately after inauguration.
David Eng, an investment advisor at Sonora Wealth Group, stated: "Currently, the market lacks certainty, and volatility will continue until the Trump administration announces clear policies. Investors are currently more focused on the issue of interest rate cuts and whether there will be more significant signals of rate cuts in the future."
Meanwhile, global central bank policies have also become a focal point for the market. The Bank of Japan will conclude its two-day meeting this Friday, with potential adjustments to interest rate policy anticipated. The Federal Reserve and the European Central Bank will hold meetings next Wednesday and Thursday, respectively. The market widely believes that the ECB has a close to 96% chance of cutting rates next week, with recent comments from ECB officials further supporting this expectation.
In terms of other currencies, the euro rose against the dollar by 0.14% to $1.0422; the pound increased by 0.31% to $1.2354; the Mexican peso climbed by 0.92% to 20.329 pesos; the Canadian dollar rose against the dollar by 0.16% to $1.435 CAD. Meanwhile, the yen appreciated by 0.33% against the dollar, reaching 155.99 yen.
U.S. employment data released on Thursday showed that new claims for unemployment benefits edged up only slightly last week, suggesting that the January labor market remains robust. On Monday, Trump signed a trade memorandum, instructing federal agencies to complete a review of several trade issues by April 1, which is widely seen as a potential key date for unveiling the tariff plan.
Additionally, following the release of Canada's inflation data this week, which came in below the 2% target, the Bank of Canada is expected to take rate-cutting action at its policy meeting next week. The market's expectations for adjustments in global central bank policies have filled the currency market with uncertainty, requiring investors to further observe the specific measures of policymakers and their potential impact on the global economy.
