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SINGAPORE - The US dollar rose on Friday, fuelled by upheavals on the global trade landscape, as US President Donald Trump announced more import tariffs, ranging from 35% on neighbouring Canada to plans for blanket levies of 15% or 20% on most trading partners.
Trump's latest trade assault on Canada was a surprise for investors who had been anticipating Ottawa could seal a new economic and security deal with its southern neighbour.
The Canadian dollar weakened against its US counterpart and was down 0.22% at C$1.369, following a knee-jerk fall of more than 0.5% after Trump unveiled the tariff rate, which will be levied from August 1.
The euro also slipped 0.1% to $1.1688, heading for a weekly decline of about 0.9% after Trump said the European Union could receive a letter on tariff rates by Friday, throwing into question the progress of
Brussels' trade talks with Washington.
"Officials from various countries that have been negotiating in good faith with the Trump administration may wonder whether President Trump may raise the bar for them - in a similar way to Canada - at this
final stretch of trade talks," said Piotr Matys, a senior FX strategist at InTouch Capital Markets.
While the market reaction to the slew of new tariffs has been largely muted compared to April's manic sell-off after "Liberation Day", investors remain on tenterhooks about global trade and whether the August 1 deadline is final.
That, in turn, has supported the dollar, which was up 0.2% against a basket of currencies at 97.79 and set to end the week with a gain of 0.8% - its biggest weekly rise since February.
Also supporting the dollar were data suggesting labour market resilience and minutes from the Federal Reserve's latest policy meeting that tempered market expectations for imminent interest rate cuts.
"Such a move higher (in the dollar) is likely to be seen by a majority of investors as a short-term corrective rebound rather than sustainable reversal. After all, President Trump's policies undermined the dollar's status as the ultimate global reserve currency," Matys said.
The dollar index is down about 9% so far this year, on worries that data could soon reflect more widely the damage US policies have had on the world's largest economy.
The yen slid 0.41% to 146.91 a dollar and was heading for a weekly decline of roughly 1.5%, after Trump slapped tariffs of 25% on Tokyo this week.
Brazil was also among those countries unexpectedly in Trump's tariff crosshairs, and the real, last at 5.532, was set to lose 2% on the week for its steepest decline in nearly five months.
President Luiz Inacio Lula da Silva said he was seeking a diplomatic solution to Trump's threat of 50% tariffs on Brazil's exports, but vowed to reciprocate like-for-like if they take effect on August 1.
Elsewhere, sterling was down 0.31% at $1.3538, close to a two-week low as data showed Britain's economy contracted unexpectedly for a second month running in May.
Meanwhile, riskier cryptocurrencies saw a boost, driven by institutional investor demand and crypto-friendly US policies.
Bitcoin advanced 3.7% and scaled yet another record high of $118,407.96, while ethereum jumped 5.7% to $2,980.15
"The ... new record reflects the resilience of global risk appetite even in the face of Trump tariffs, as well as high optimism over US legislative proposals," said DBS FX and credit strategist Chang Wei Liang.
He was referring to measures the US House is set to advance in its upcoming 'Crypto Week'.
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