A large number of shipping containers in a busy cargo port. Original public domain image from Wikimedia Commons

**U.S. Dollar Consolidates as Tariff Promises Create Market Jitters Amid Upcoming Inflation Data**

*By Brigid Riley*

**TOKYO (Reuters)** – The U.S. dollar remained stable against major currencies on Wednesday, as traders assessed the implications of President-elect Donald Trump’s recent tariff commitments and anticipated key inflation data from the U.S. later in the day.

Trump’s announcement on Monday regarding significant tariffs on the United States’ top three trading partners—Canada, Mexico, and China—has prompted a wave of caution among investors. Although initial reactions were somewhat muted as the trading day in the U.S. progressed, the market continues to exhibit signs of apprehension.

“Market participants are likely to adopt a cautious approach as the looming second Trump administration rekindles uncertainty in U.S. policy-making,” commented Carol Kong, currency strategist at Commonwealth Bank of Australia. “This uncertainty often results in a ‘sell first and ask questions later’ mentality, which could strengthen the U.S. dollar in the short term.”

In the latest trading, the U.S. dollar gained 0.15% against the Canadian dollar, trading at C$1.40755, after having reached a peak of C$1.4178 on Tuesday—the highest level in four and a half years. Against the Mexican peso, the dollar saw a 0.3% increase but remained below its highest mark since July 2022.

Wei Liang Chang, a currency and credit strategist at DBS in Singapore, suggested that traders should avoid panic selling, as tariffs often serve as negotiation tools rather than indicators of long-term economic strategy.

Investors await the release of the October Personal Consumption Expenditures (PCE) price index, which could further influence dollar dynamics ahead of the U.S. markets’ closure for the Thanksgiving holiday on Thursday. The dollar index, which gauges the performance of the dollar against six other major currencies, dipped slightly by 0.07% to 106.83.

The Japanese yen has been performing well, bolstered by safe-haven demand and increasing speculation about an interest rate hike in Japan this December, leading to some position adjustments among traders. “With Thanksgiving approaching, many are unwinding their Trump-related trades, which may include reducing long positions on the dollar,” noted Shinichiro Kadota, senior currency and rates strategist at Barclays in Tokyo. However, Kadota projects that, in the longer term, Trump’s policies may ultimately support a stronger dollar against the yen as the impact of tariffs unfolds.

In recent trading, the dollar weakened by 0.47% against the yen, reaching 152.37—its lowest level in nearly three weeks. Meanwhile, the Chinese offshore yuan fell by 0.11% to 7.2661 amid concerns over weak industrial profits and tariff anxiety, with the onshore yuan slightly down by 0.08%, edging closer to its lowest point since late July.

On the geopolitical front, a ceasefire between Israel and Hezbollah has taken effect, a development brokered by the United States and France, which led to a surge in the Israeli shekel reaching a three-month high.

In European currencies, the euro experienced a minor decline of 0.10%, trading at $1.0479, while the British pound remained steady at $1.2570. The Australian dollar edged up by 0.03% to $0.6476, reflecting steady consumer price inflation figures for October. The New Zealand dollar rose by 0.5% to $0.58635.

In the cryptocurrency markets, bitcoin showed a slight increase of over 1%, trading at $92,692, although it remains below its recent peak of $99,830. This selloff has been attributed to profit-taking after last week’s rally.

As the market navigates these turbulent waters, forex traders are advised to closely monitor the ongoing developments and economic indicators, paying particular attention to upcoming U.S. inflation data, which could significantly impact currency valuations moving forward.