Dollar Strengthens Sharply as Trump Unleashes New Tariff Measures

Dollar Strengthens Sharply as Trump Unleashes New Tariff Measures

The U.S. dollar is on track for its most impressive weekly surge in nearly three years, gaining significant ground against major global currencies. This momentum was fueled by President Donald Trump’s decision to escalate tariffs on a broad group of trading partners.

One of the most affected currencies was the Swiss franc, after Switzerland was hit with a steep 39% tariff. The franc sank to a six-week low, while the Canadian dollar marked its seventh consecutive weekly drop.

However, the dollar’s rally wasn’t solely tied to trade actions. The Japanese yen, for instance, declined markedly as the Bank of Japan signaled no urgency to raise interest rates. This prompted Japan’s Finance Minister to voice concern over the yen’s volatility.

On the macroeconomic front, investors awaited Friday’s U.S. jobs report, forecast to show 110,000 new jobs in July’s nonfarm payrolls. Much of the dollar’s recent strength stems from confidence that the tariffs have yet to significantly derail economic growth or trigger inflation spikes.

Despite pressure from President Trump, the Federal Reserve has shown no haste in adjusting interest rates. Analysts suggest that unless there’s a sharp downturn in data, a rate cut in September remains unlikely.

The U.S. dollar index is set for a 2.4% weekly increase, its strongest since a 3.1% jump in September 2022. On Friday, it hovered around 100.13—its highest point since late May.

U.S. stock markets, meanwhile, slipped on Thursday. The Dow Jones lost about 0.75%, the S&P 500 declined by over 0.3%, and the Nasdaq ended slightly down.

Tariffs Rattle Currency Markets

The Swiss franc weakened broadly, relinquishing its typical safe-haven status amid falling stocks and commodities. Trump’s tariffs and pressure on pharmaceutical firms to lower prices also contributed to the selloff. The dollar rose as high as 0.8173 francs—its best level in six weeks—while the euro climbed to 0.932 francs.

The Canadian dollar also struggled after being hit with a 35% tariff, higher than the previously anticipated 25%. The U.S. dollar reached a session high of 1.38735 CAD.

The euro continued to underperform, trading near a two-month low at $1.1408, with markets interpreting the recent U.S.-EU trade pact as disproportionately favoring Washington.

Short-term projections point to further dollar strength. Analysts believe the bulk of the tariff impact is already priced in, with the euro’s downturn seen as a major story of the week. Critics in France and Germany have called the EU’s trade arrangement with the U.S. unfair and damaging to Europe’s interests.