U.S. Dollar Gains Amid Tariff Concerns and Fed Policy Outlook

The U.S. dollar strengthened against major currencies on Friday as markets reacted to tariff concerns and economic data. The Canadian dollar weakened, while the Mexican peso edged higher after the White House reaffirmed that President Donald Trump would impose tariffs on Saturday.

Earlier, Reuters reported that Trump would delay tariff collection on Canadian and Mexican imports until March 1. However, White House spokesperson Karoline Leavitt dismissed the report, stating duties would take effect immediately.

The greenback’s rally was fueled by stronger-than-expected U.S. economic data. The Personal Consumption Expenditures (PCE) Price Index rose 0.3% last month, signaling robust consumer spending. This supports expectations that the Federal Reserve will keep interest rates steady.

The dollar climbed 0.12% against the Canadian dollar to C$1.451, nearing a five-year high, while the Mexican peso gained 0.17% to 20.728 per dollar. Against the Japanese yen, the dollar advanced 0.54% to 155.13, securing a third consecutive week of gains. It also added 0.1% against the Swiss franc, ending two weeks of losses. Meanwhile, the euro slipped 0.3% to $1.0367, recording a 1% weekly drop.

Market sentiment was influenced by global central bank actions. The European Central Bank cut interest rates, signaling another potential cut in March amid sluggish economic growth. The Bank of Japan maintained a loose monetary stance as Tokyo’s core inflation hit 2.5%. The Fed held rates steady, with Chair Jerome Powell suggesting no rush for cuts but acknowledging scope for easing.

The U.S. dollar index rose 0.31% to 108.42, up 0.93% for the week. Investors remained cautious ahead of potential tariff developments and economic shifts as February began.