LONDON :The dollar rose against its major peers on Thursday after a court blocked U.S. President Donald Trump from imposing import tariffs on other countries, providing some relief for the currency that has struggled this year due to trade uncertainty.
The greenback gained a third of a percent against the yen and the Swiss franc but was off session highs after the trade court ruling that found Trump overstepped his authority by imposing across-the-board duties on imports from U.S. trading partners.
The Trump administration filed an appeal within minutes.
“Reciprocal tariffs are off for now, but this should not alter the medium trend. Trump may find other methods to impose his economic and trade agenda, so in that respect it’s uncertainty squared,” said Kenneth Broux, head of corporate research FX and rates at Societe Generale.
“For some investors this is just an opportunity to diversify to non-dollar securities.”
U.S. assets including the dollar have been hurt in recent months as investors reassess historic assumptions around the strength of U.S. markets given an erratic trade policy and concern about high debt.
The dollar briefly hit a two-week high at 146.29 yen and was last trading 0.34 per cent higher on the day at 145.23 yen. It was also 0.34 per cent higher against the Swiss franc at 0.8296.
The euro slipped 0.13 per cent to around $1.1276 and sterling was slightly weaker at around $1.3467. That left the dollar index, which measures the U.S. currency against six major peers, back above 100 for the first time in a week.
“There’s an initial reaction of a stronger dollar and weaker yen. However, considering judicial processes like appeals, I don’t expect a continuous rise in the dollar,” said Hirofumi Suzuki, chief FX strategist at SMBC.
The dollar index remains down 8 per cent so far this year and analysts said that the new court ruling did little to offer clarity on the outlook for tariffs and they were sceptical of a sustained dollar rally in the face of a long court battle.
The greenback has weakened about 2 per cent against the yen, nearly 6 per cent against the Swiss franc and 4 per cent against the euro since Trump slapped harsh levies on global economies on April 2, while the broader dollar index has fallen more than 3 per cent.
U.S. Treasuries also sold off, with 10-year yields up 5 basis points at 4.53 per cent.
Europe’s benchmark STOXX 600 index was up 0.3 per cent in early trading, and U.S. stock futures jumped on a risk-on rally.
Global investor sentiment was also lifted this week after Trump delayed at the weekend his plan to impose 50 per cent tariffs on European Union imports, and investors are on the lookout for any signs of improving relations between the United States and its trade partners.
Traders meanwhile cut their expectations for Federal Reserve interest rate cuts to 42 basis points of easing compared with 50 basis points earlier in the week, LSEG data showed.
