NEW YORK (Reuters) -The U.S. dollar rose on Wednesday to move further from recent 11-week lows, as investors assess the strength of the economy and tariffs outlook after the most recent comments from U.S. President Donald Trump.
The greenback stumbled on Tuesday as economic data showed a sharp drop in consumer confidence, the latest in a string of data points that have prompted concerns about the strength of the U.S. economy and persistent inflation, and caused U.S. Treasury yields to tumble.
The benchmark 10-year U.S. Treasury yield plunged nearly 10 basis points (bps) on Tuesday and was last down 4.2 basis points to 4.256% after falling to 4.249%, its lowest since December 11 as an earlier attempt to stabilize dissipated.
“We’ve had a pretty good sell-off since January, a lot of that’s been fueled by the adjustment lower in U.S. real rates, which was largely fueled by the underperforming data we’ve been seeing, including yesterday,” said Brad Bechtel, global head of FX at Jefferies in New York.
“We’re at a stage now where we’re probably just going to chop around for a bit until we hear more about what’s actually happening with tariffs.”
The dollar index, which measures the greenback against a basket of currencies, rose 0.21% to 106.46, with the euro down 0.26% at $1.0486.
The greenback had fallen nearly 4% from a more than two-year high hit in January as worries have emerged about U.S. economic growth as well as inflation, as investors deal with shifting tariff deadlines by Trump on Canada and Mexico. Investors are also bracing for the labor market impact from actions taken by Elon Musk’s Department of Government Efficiency.
The Canadian dollar weakened 0.9% versus the greenback to C$1.43 while the Mexican peso strengthened 0.3% versus the dollar at 20.406.
Trading in both currencies was choppy after Trump said at a cabinet meeting that they would take effect on April 2, but a White House official, however, said the March 4 deadline for the tariffs on Mexican and Canadian goods remained in effect “as of this moment.”
Even with the recent declines, the dollar has risen in three of the past four sessions and “the market is still respecting the fact that there’s an underlying bid tone to the dollar overall, and that’s kind of why we’re holding in around 106 for now,” said Bechtel.
Markets are currently pricing in 57 bps of rate cuts from the U.S. Federal Reserve by the end of the year, with expectations for a cut of at least 25 bps not topping 50% until the June meeting.
