Written by Stefano Rebaudo
(Reuters) – The U.S. dollar fell to a one-week low against major currencies on Wednesday as investors grew wary of President-elect Donald Trump's tariff pledges as they rebalanced their portfolios by the end of the month. .
Markets will closely watch the Personal Consumption Expenditures (PCE) Price Index, which will be released later Wednesday, before U.S. markets close for Thanksgiving on Thursday.
Investors were spooked by President Trump's announcement Monday that he would impose major tariffs on three of the United States' biggest trading partners: Canada, Mexico and China.
Markets will continue to be nervous about President Trump's announcement that he will take office in late January and expectations for a possible U-turn.
Some analysts argued that inflation risks could prevent President Trump from introducing more destructive policies.
“President Trump recognizes that his victory was almost entirely due to the 3I's (inflation, inequality and immigration) and that prices are key,” said Viktor Shvetz, global head of desk strategy at Macquarie Capital. I believe there is,” he said.
“If there is no improvement, the retaliation from voters could be severe. We don't have much time, as the midterm elections will be dominant within 12 months,” he added.
Shvetz noted that President Trump nominated Scott Bessent to be Secretary of the Treasury, and that Bessent is expected to rein in the U.S. budget deficit and use tariffs as a negotiating tool.
The U.S. dollar index of six rival stocks last fell 0.45% to 106.42, after hitting 106.33, its lowest since Nov. 20. It has risen about 30% since November 6, the day after the US election.
“The recent sharp appreciation of the dollar has significantly reduced the value of dollar assets outside the U.S., increasing the need to rebalance by selling dollars at the end of the month,” said Cheryl Dong, currency strategist at Barclays. Ta.
The yen outperformed due to rising expectations for Japan's December interest rate hike and position adjustments.
The dollar fell more than 1% against the yen, with selling accelerating as the cross fell below the 200-day moving average of 151.998 yen.
Analysts have expressed some comfort that the country is not in the line of sight of President Trump's tariffs.
“Japan has a strong hand in addressing U.S. trade concerns,” said Jane Foley, senior currency strategist at Rabobank.
He added that the company is “the largest foreign holder of U.S. Treasuries and the largest provider of foreign direct investment to the United States.”
The dollar last fell 1.09% to 151.58 yen against the yen, after hitting 151.20 yen, its lowest since October 23. The dollar fell almost 2% in two sessions.
