Dollar Holds Ground, Riding On Safe-Haven Appeal, As Trump’s New Tariff Warnings Dent Risk Appetite

The U.S. dollar has firmed up against its major counterparts, as sentiment toward the greenback improved due to its safe-haven appeal amid the ongoing tariff uncertainties.

The U.S. Dollar Index edged up 0.17% to $97.82 early Friday as traders assess the impact of President Donald Trump’s latest letter communicating a 35% levy on Canada by Aug. 1 if a deal doesn’t get done. 

The DXY measures the performance of the greenback against a basket of six major global currencies.

The index fell to a nearly three-and-a-half-year low of 96.38 on July 1 before staging a recovery. 

The Invesco DB US Dollar Index Bullish Fund (UUP), an exchange-traded fund (ETF) that tracks the performance of the Deutsche Bank Long US Dollar Index (USDX) Futures Index, was seen up 0.15% at $27.18 in Friday’s early premarket trading.

The UUP has lost about 7.75% year-to-date, while the SPDR S&P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S&P 500, is up 7.4%

The president also reportedly told NBC News that he is mulling a blanket rate of 15%-20% for the remaining countries, which have not been addressed in the over a dozen letters he dispatched this week.

The Canadian dollar slipped in reaction, dropping about 0.50% immediately after Trump’s announcement. The loonie recouped some of the losses and was last seen trading down by 0.27% against its U.S. counterpart.

IG Market analyst Tony Sycamore said, although the market has already factored in tariff developments, it has not braced for the levy on Canada, Reuters reported.

The dollar firmed up by the most against the Japanese yen, rising 0.41% to 146.8 yen a dollar. 

Trump said earlier this week that the European Union could get a letter on Friday despite the 27-nation bloc, Washington’s biggest trading partner, signaling that it was working on a preliminary framework agreement to sidestep a higher rate that could become applicable by the Aug. 1 deadline. 

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