The dollar rose slightly on Monday after U.S. President Donald Trump warned of more tariffs, including on steel and aluminium, while a gauge of global stocks shook off concerns about more duties and advanced.
Speaking to reporters on Air Force One on Sunday, Trump said he would announce on Monday 25% tariffs on all steel and aluminium imports into the U.S., and reveal other reciprocal tariffs soon afterwards.
China’s retaliatory tariffs on some U.S. exports take effect on Monday, with no sign as yet of progress towards a new trade arrangement between Beijing and Washington.
The dollar index, which measures the greenback against a basket of currencies, advanced 0.13% to 108.23, with the euro down 0.13% at $1.0312.
“This is still very early days,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “The market’s sort of just sort of chopping around rather than really directional right now.”
Against the Japanese yen, the dollar strengthened 0.17% while sterling weakened 0.16% to $1.2386.
The Canadian dollar weakened 0.27% versus the greenback to C$1.43 per dollar and the Mexican peso weakened 0.37% versus the dollar at 20.642 as the greenback retreated from earlier highs.
On Wall Street, U.S. stocks were higher, led by gains in the energy and tech sectors. The S&P 500 materials index rose 0.2%, buoyed by gains of more than 5% in steel companies Nucor and Steel Dynamics.
Shares of McDonald’s also climbed to provide support for stocks after the fast-food restaurant reported its quarterly results.
MSCI’s gauge of stocks across the globe rose 4.77 points, or 0.55%, to 874.21 and was on track for its fourth gain in the past five session. Europe’s STOXX 600 index rose 0.63% to hit an intraday record of 546.34.
Europe’s continent-wide STOXX 600 index rose 0.5% after slipping 0.38% on Friday.
Shares of some European steelmakers gained, reversing earlier declines, including Luxembourg-based ArcelorMittal and Germany’s Salzgitter.
Some analysts are concerned tariffs could rekindle U.S. inflation pressures, removing flexibility from the Federal Reserve to cut interest rates, a possible outcome which has helped support the U.S. dollar since Trump’s re-election.
Markets are largely expecting the Fed to hold rates steady at its March meeting, with expectations for a cut of at least 25 basis points not climbing above 50% until June, according to CME’s FedWatch Tool.
Morgan Stanley chief U.S. economist Michael Gapen said in a note to clients the recent imposition of tariffs raised the bar for rate cuts and the firm only expects a single cut this year, to come at the June meeting.
Fed Chair Jerome Powell is due to speak on Tuesday for the semiannual monetary policy testimony before the Senate Banking, Housing and Urban Affairs Committee. His comments on tariffs and inflation are likely to be closely monitored.
The yield on benchmark U.S. 10-year notes fell 1.8 basis points to 4.469% in the wake of comments from Trump on Sunday that his administration may look into Treasury debt payments for signs of fraud.
Oil prices rebounded despite lingering fears over a potential global trade war. U.S. crude rose 1.49% to $72.06 a barrel and Brent rose to $75.64 per barrel, up 1.29% on the day.
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