Investing.com – The US dollar lifted slightly on Thursday but remained in a tight trading range ahead of a speech by President Donald Trump at the World Economic Forum.
At 04:15 ET (09:15 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was up 0.2% at 108.150, after starting the week down more than 1% .
Dollar runs water
The dollar has largely tread water over the past few days as traders await more clarity on President Donald Trump’s plans for tariffs, following the sharp fall on Monday when his first day in office brought a barrage of executive orders, but none on tariffs .
He then discussed tariffs of around 25% on Canada and Mexico and 10% on China from February 1, mentioning duties on European imports, but without concrete action.
Trump will speak later in the session at the World Economic Forum in Davos, Switzerland, and traders are awaiting outreach for comments on the topic and for his stance on key geopolitical and economic issues such as the Ukraine-Russia war and the economic rivalry with China.
“This week’s dollar correction has not gone too far. Despite the dollar’s heavy one-way positioning, investors lack clarity on the timing of Trump’s tariff threats, preventing them from reducing dollar holdings,” analysts at Ing said in a note.
Also causing traders to pause for breath is the flurry of policy decisions at the central bank over the next week, including Friday, before the next week and the week after.
Euro lower for the ECB meeting
In Europe, trade fell 0.1% lower to 1.0404, with the single currency weak ahead of next week’s ECB meeting, with interest rates largely seen as a done deal.
“This week’s EUR/USD bounce has been quite muted so far,” Ing said. “There is no way investors can expect a ‘completely clear’ signal on rates. And keeping trading partners off balance/guessing is a tactic that kept the dollar in pretty good shape during Trump’s last tariff regime in 2018-19. ”
traded 0.1% lower to 1.2304, while rising 0.2% to 11.3035 ahead of a policy meeting later in the session.
“Norges Bank is widely expected to keep rates on hold,” said Ing. “Overall, the key variables monitored by NB have not clearly argued that a rate cut should be pushed beyond March. Also, the risks to global growth related to Trump’s protectionism plans should encourage policymakers to allow breathing space with a reduction in speed before the end of the first quarter. “
BOJ meeting to conclude Friday
In Asia, trading mostly at 156.47 ahead of the Bank of Japan’s two-day policy meeting, which concludes on Friday.
The BOJ is widely expected to raise interest rates as recent inflation and wage data are encouraging and the central bank is likely to signal further rate hikes if the economy maintains its recovery
Trading 0.2% higher at 7.2877, with Chinese currency weaker on fears Trump will reaffirm US tariffs on Chinese imports, bringing the world’s second-largest economy into the fold.
