The U.S. dollar held firm on Wednesday, bolstered by trade tariff concerns and stalled Russia-Ukraine peace talks, while the New Zealand dollar weakened following an aggressive rate cut by its central bank.
The Reserve Bank of New Zealand slashed its benchmark rate by 50 basis points to 3.75% to stimulate the sluggish economy. The kiwi fell 0.3% to $0.5687 as policymakers signaled further cuts. Meanwhile, the euro dipped to $1.0442 amid geopolitical tensions, with divisions between the U.S. and Europe on Ukraine adding uncertainty.
President Donald Trump’s tariff threats drove market unease, with plans for a 25% levy on autos, semiconductors, and pharmaceuticals. The greenback edged up, supported by euro softness, though it remained near a two-month low of 106.56. Analysts suggest skepticism around Trump's tariff moves could limit USD gains.
The Federal Reserve’s January meeting minutes, expected later Wednesday, could offer insight into future monetary policy. Markets have priced in around 35 basis points of cuts for 2025. The dollar index rose 0.04% to 107.04.
The Japanese yen strengthened to 152 per dollar, supported by strong GDP growth and inflation, fueling speculation about a Bank of Japan rate hike in July. Investors await remarks from board member Hajime Takata and upcoming CPI data.
Sterling held steady at $1.2613 after hitting a two-month high of $1.2641, with UK inflation data due Wednesday. Meanwhile, the Australian dollar slipped 0.07% to $0.63495 as wage growth slowed, reinforcing expectations of cautious monetary policy from the Reserve Bank of Australia.
Investors remain watchful of geopolitical developments, central bank policies, and trade uncertainties shaping currency movements.


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