How Trump’s policies could influence the price of the US dollar

A perspective of worsening for the economy of the United States and expectations for greater market volatility are promoting changes in currency assessments, with market observers divided into which coins they see as firm safe paradises.

This month’s geopolitical developments have seen US tariffs about Canada, Mexico and Porcelain In effect, President Donald Trump ‘S reported pause on military aid To Ukraine, Softer economic data in the United States outside the United States and European leaders who commit themselves to Increase defense spending.

Jane Foley, director of FX’s strategy in Rabobank London, told CNBC by email on Tuesday that the British pound and the Japanese Being winners in the current environment.

“The fact that US data suggest that there is a modest commercial surplus with the United Kingdom suggests that it is unlikely that the latter is in Trump’s sights and that GBP is probably ongoing to continue the highest spring compared to the euro,” he said. “That said, it is stretch to call the pound as a safe shelter.”

Triumph implied After a meeting with the British prime minister, Keir Starmer, last week, the United Kingdom can avoid becoming the goal of US tariffs.

Sterling was quoted at $ 1,2712 at 10:19 am, London time on Tuesday, marking an increase of 0.1% against the US dollar, but fell around 0.1% compared to the euro. Since the beginning of the year, the British currency has won 1.6% against Greenback, according to LSE data.

“Japan also has a strong hand to deal with the United States,” Foley told CNBC. “Although Japan has a commercial surplus with the US. committed to increasing investment flows In the United States and the growing defense budget of Japan almost everything in the United States is spent “

Foley also pointed out that Japan’s political environment favored YEN, which has won 5% against Greenback since the beginning of the year.

“To the extent that the foundations of Japan have improved and, since the Bank of Japan is the only Central Bank G10 with a hardening bias, I hope that (YEN) has a good performance this year, which will probably strengthen its credentials as a safe refuge,” he said.

David Roche, strategist of the quantum strategy, agreed that current conditions reinforced the long -standing state of the Japanese currency as a coverage against volatility, which suggests that geopolitical instability in the West could consolidate it as “the new safe refuge.”

In statements to “Europe Squawk Box” of CNBC on Monday, Roche discussed Trump’s consequences and the public confrontation of Vice President JD Vance with Ukrainian President Volodymyr Zelenskyy in the Oval office last Friday.

Roche argued that Trump administration policies could see Back Back Back as the safe FX market shelter.

“The great loser is actually the United States, because no one will trust a treatise in the United States again,” he said about the United States moving away from supporting Ukraine. His comments came to a White House official He said to the media On Tuesday that the United States had stopped all military aid to Ukraine.

“You want to stay out of euro And Yen has, which is now the new safe refuge since the United States looks very dangerous. “

Kamal Sharma, Bofa Global Research FX strategist, adopted a different position from Roche in the euro and argued that the impact of Trump’s rates can have a limited impact on currency markets.

“FX has taken the night ads largely in its path, although the tone in G10 FX is slightly defensive this morning with the (Swiss Franc) leading the profits versus usd and even (the Canadian dollar) recovers some of the initial losses,” he said in comments by email on Tuesday. “The high Beta G10 FX is under some pressure, particularly antipodeans in the power of China.”

“We have used the term ‘tariff purgatory’ to describe how markets have been on alert for implementation since the beginning of the year,” Sharma added. “Therefore, the ads were not totally surprising in the context of what has already been said. Part of the narrative now is that the developments overnight placed the ball firmly in the EU court and there is more urgency to intensify defense spending, and this is helping European actions and ((the (the euro) through higher yields (BOND) “.

However, Dominic Schnider, Chief of Global FX and Basic products of UBS Global Wealth Management, argued against the case of Francia’s Swiss meeting on the back of the developments throughout the Atlantic.

“The most safe ‘appeal of Franc is decreasing as the ease of geopolitical concerns, and investors can change more significantly towards higher performance coins such as (Australian dollar) and (British pound),” he said.

“The total return perspective of the Swiss Franc is not convincing, in our opinion, and although it must be exchanged from the side compared to the euro for most of the year, Franco remains under pressure against better yields,” Schnider added.

Meanwhile, Christian Mueller-Glissmann, head of asset assignment in Goldman Sachs, said Monday “Europe’s Street Signs” of CNBC that he still expects the dollar to increase. Since the beginning of the year, the dollar index – which measures the American currency against a basket of main rivals – has reduced 2%, after increasing by 7% over the course of 2024.

“We believe there are still advantages … the dollar (American),” said Mueller-Glissmann. “I know that the dollar becomes a different story now … with the rest of the world it looks better. But if you want to look at Safe Have FX, a currency that has not done anything during the last nine months is the Swiss Franco, our team has sought a lot in the impact of rates on Switzerland, and it could actually be lower than what you get for the EU or for many other countries.”