Dollar poised for weekly slide as global tensions rise
TOKYO: The US dollar was poised for a second straight weekly decline on Friday as tariff threats against countries trading with Cuba added to global tensions that have sapped demand for US assets.
The White House said that President Donald Trump signed an executive order that would impose tariffs on countries that provide oil to Cuba, adding to recent geopolitical strains involving Iran, Venezuela, Greenland and Europe.
Reports that Trump is considering strikes against Iran prompted a surge in oil prices and weighed on the dollar index (DXY).
The US domestic front got a glimmer of hope from a deal in the Senate that would avert a partial government shutdown. In Japan, data showed inflation slowed in Tokyo but matched the central bank's target.
"The DXY continued its downward trend, as Trump's threats of military action in Iran added further pressure," Mantas Vanagas, a senior economist at Westpac Group, wrote in a note.
The dollar index, which measures the greenback against a basket of currencies, rose 0.2 per cent to US$96.35, trimming its weekly slide to one per cent.
The euro lost 0.2 per cent to US$1.194. The yen weakened 0.17 per cent to 153.39 per dollar. Sterling fell 0.1 per cent to US$1.3791.
The dollar hit a four-year low earlier in the week after Trump seemed to shrug off the currency's weakness, recovering slightly after Treasury Secretary Scott Bessent said that Washington has a strong-dollar policy.
Trump is weighing options against Iran that include targeted strikes on security forces and leaders to inspire protesters, multiple sources said. Trump has described the ships in the region as an "armada" sailing to Iran.
The greenback ended last week with its biggest fall since last April, driven partly by concerns about US policy over Greenland.
The dollar found some support after the Federal Reserve held interest rates steady on Wednesday against the backdrop of what US central bank chief Jerome Powell described as a solid economy and diminished risks to both inflation and employment.
The dollar slide has provided some reprieve for the battered yen. The Japanese currency has tracked around the 152 to 154 per dollar range for most of this week thanks to talk of rate checks from the US and Japan last week – a move often seen as a precursor to intervention.
Core consumer prices in Tokyo rose two per cent in January from a year earlier, data showed on Friday, slowing from the previous month but matching the central bank's target.
The Australian dollar weakened 0.2 per cent versus the greenback to US$0.7033. The kiwi fell 0.2 per cent to US$0.6066.
In cryptocurrencies, bitcoin fell 0.1 per cent to US$84,309.27, and ether declined 0.3 per cent to US$2,808.19.