The dollar fell to a one-month low against a basket of currencies on Friday after US President Donald Trump called for interest rates to fall and suggested a potentially softer stance on tariffs against China.
The dollar index fell 0.7 per cent to its lowest level since mid-December, after Mr Trump said he knew rates “much better” than the Federal Reserve and would like to see them fall “a lot”.
The euro, which has fallen sharply in recent months, jumped 0.8 per cent to $1.05 while sterling gained 0.7 per cent at $1.243.
Mr Trump also said he would “rather not” hit China with tariffs. Investors this week have sold the dollar as Mr Trump’s widely expected tariff announcements did not immediately materialise.
The resilience of the US central bank to pressure from the new president is a core theme for this year, fund managers say.
“The pressure is going to be huge on the Fed,” said Olivier De Larouzière, chief investment officer for global fixed income at BNP Paribas Asset Management.
There are “good reasons” for investors in the coming quarters to start to price in rate rises for 2026, he added, and so the market will be “closely monitoring” the Fed’s communications over the coming months to see whether the Trump rhetoric is stopping that tightening bias coming through.
Copyright The Financial Times Limited 2025
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