Singapore (Reuters) - The dollar is set to end the week stable and is expected to see a loss for the quarter due in part to concerns about the impact of tariffs on U.S. economic growth, which have led to a decrease in U.S. yields, stocks, and the value of the currency.
The euro, currently trading just below $1.08, is on track for its largest quarterly increase in over a year, having risen by more than 4% since the beginning of 2025. This gain is driven by a mix of positive developments in Ukraine, the weaker dollar, and a rise in benchmark German yields.
The Japanese yen has seen a slight strengthening and is likely to record a quarterly increase of nearly 4%, trading at 151.19 per dollar, largely unaffected by the recent Tokyo CPI data.
Scandinavian currencies have performed well within the G10 group, with Sweden and Norway showing year-to-date gains of close to 11% and almost 9%, respectively. Central banks in these countries appear hesitant to further reduce interest rates.
Later today, France and Spain will release preliminary inflation data, while the U.S. will receive the February figures for the Federal Reserve's core PCE inflation measure. A lower-than-expected 0.3% month-on-month increase in inflation could put downward pressure on the dollar and U.S. interest rates.
Traders are anxious about U.S. President Donald Trump's intentions to announce significant new tariffs next week, potentially affecting trade flows leading into the weekend. Trump has already indicated that tariffs of 25% on imported cars will come into effect on April 3.
The dollar's recent decline has surprised many market participants who had anticipated a stronger U.S. currency in the face of Trump's tariff policies. This has led to the unwinding of long dollar positions and uncertainty among traders on how to navigate their positions as trade dynamics shift.
Despite facing heavy U.S. tariffs, the Canadian dollar has actually appreciated by around 0.5% this year to C$1.4306 per dollar. If Trump shifts his focus to Europe next week, the euro could come under pressure.
Should the EU be subjected to broad-based punitive tariffs, it is expected to retaliate with countermeasures, which could lead to a drop in the value of the euro, according to Peter Dragicevich, Asia-Pacific currency strategist at payments platform Corpay.
The Australian dollar currently stands at $0.6291, with a projected quarterly increase of about 2% and trading within a range that has held since December. No change in interest rates is anticipated at the Reserve Bank of Australia's next meeting where two new board members will attend.
The New Zealand dollar remains steady at $0.5728 and is on course for a quarterly gain of approximately 2.5%.