The U.S. dollar firmed on Thursday, buoyed by renewed trade tensions as markets reacted to the possibility of new tariffs under Donald Trump’s potential return to office. Investors grew cautious amid speculation that a more protectionist trade policy could resurface, prompting a shift toward safer assets.
The dollar’s strength was further supported by expectations that the Federal Reserve will maintain higher interest rates, reinforcing demand for the greenback. While recent economic data suggests a resilient U.S. economy, traders remain focused on potential policy changes that could impact global trade flows.
Meanwhile, the Japanese yen is set to end the month with a gain, benefiting from renewed safe-haven demand as market uncertainty grows. Investors seeking refuge from volatile trading conditions have favored the yen, particularly as concerns over geopolitical risks and trade policy shifts mount.
Despite its recent stability, the yen’s outlook remains tied to the Bank of Japan’s next policy moves. While the central bank has maintained its ultra-loose monetary stance, speculation continues over when it may begin adjusting its negative interest rate policy, a factor that could further influence currency markets.
Global markets are now closely watching Trump’s potential trade policies and how they could impact major economies, particularly those with strong trade ties to the U.S. Any formal announcements regarding tariffs could trigger broader market reactions, influencing both the dollar and other major currencies.
For now, the dollar remains firm, while the yen holds onto its monthly gains, as traders position themselves ahead of key economic and political developments. The coming weeks will be crucial in determining whether trade tensions escalate, adding further pressure to global currency markets.
