The U.S. dollar held steady on Wednesday, with traders weighing the implications of Ukraine peace talks between the U.S. and Russia as well as a fresh tariff threat from President Donald Trump.
By 07:20 ET (12:20 GMT), the U.S. dollar index, which measures the greenback against a basket of its currency peers, had edged up by 0.1% to 107.21. Last week, it fell by 1.2%.
Meanwhile, the euro weakened against the dollar by 0.2% to $1.0426.
Trump suggested on Tuesday that he could meet with Russian counterpart Vladimir Putin before the end of February, adding Moscow “wants to do something” to halt the war in Ukraine after peace talks between representatives from the two countries.
The meeting in Saudi Arabia on Tuesday yielded promises of more negotiations, although media reports said Russia’s demands had hardened, especially its stance against Ukraine receiving NATO membership.
Critics of Trump also hit out at Kyiv’s absence from the talks in Riyadh, which were the first between the U.S. and Russia since the conflict broke out in 2022. Ukraine has stated that it will not accept a peace deal made on its behalf.
Separately, Trump said he would slap tariffs on cars imported into the U.S. “in the neighborhood of 25%,” as well as other duties on semiconductors and pharmaceutical products.
It was the latest update to what has become a frequent drumbeat of tariff threats issued by Trump since he was sworn in for his second term in the White House last month.
Some economists have warned that the levies could refuel inflationary pressures and slow the pace of potential Federal Reserve interest rate cuts this year, possibly strengthening the dollar and weighing on foreign currencies. Investors may receive more insight into how the Fed sees the tariffs impacting its borrowing cost trajectory on Wednesday when the central bank is due to release minutes from its last policy gathering.
Elsewhere, inflation in the U.K. accelerated by more than anticipated in January, touching a 10-month peak of 3.0%, figures from the Office for National Statistics showed. Sterling was choppy after the data.
In Asia, the Japanese yen’s USD/JPY pair was largely unchanged after the country’s trade deficit widened in January. Exports grew less than expected, while an imports surge outpaced expectations.
“Japanese trade data suggest a modest economic recovery underway in the current quarter. But the jump in exports comes with big caveats, particularly the specter of US tariffs, that cloud the outlook,” ING analysts said in a note.
The Chinese yuan’s onshore pair USD/CNY was largely unchanged, while the offshore pair USD/CNH gained 0.2%.
