U.S. Dollar Gains on Renewed Tariff Tensions; Crypto Rallies as Risk Appetite Holds
The U.S. dollar strengthened against major currencies on Friday as President Donald Trump reignited global trade tensions by announcing new tariffs on Canada and other trading partners.
In a letter issued late Thursday, Trump confirmed a 35% tariff on all Canadian imports, effective August 1. He also signaled that the European Union would be formally notified of potential tariff hikes by Friday.
Trump proposed sweeping 15% to 20% tariffs on a range of countries, escalating from the current 10% baseline. This follows a week in which Brazil, one of America’s trade surplus partners, was hit with 50% tariffs, and new duties were applied to copper, pharmaceuticals, and semiconductor imports.
“There are definite signs of renewed tariff concerns creeping into the markets after Trump floated the idea of blanket tariffs,” said Michael Brown, a market analyst at Pepperstone in London. “That said, movements in the FX space remain relatively contained for now, with most currencies staying within recent trading ranges.”
The U.S. dollar rose 0.79% against the yen to 147.4, setting it up for a nearly 2% weekly gain—its strongest since early December. It was flat against the Swiss franc at 0.79695, while the euro slipped 0.1% to $1.1688. The dollar also rose 0.6% versus the yen to 147.05.
The Canadian dollar weakened 0.11% to C$1.3672 after initially falling more than 0.5% in reaction to the tariff announcement. The Brazilian real also dropped 0.26% against the greenback.
While the market reaction has been less volatile than the sharp sell-off seen after Trump’s “Liberation Day” tariff announcement in April, investors remain cautious ahead of the August 1 implementation date and the broader implications for global trade.
Despite the renewed strength, some analysts remain skeptical about the dollar’s medium-term prospects, given the overall downward trend seen this year.
“My base case is still for a gradual depreciation in the dollar over time,” said Brown, “but given the recent sharp decline, there’s room for a short-term rebound—especially if bearish positions get squeezed.”
Supporting the dollar’s momentum were signs of continued labor market strength and Fed minutes that cooled expectations for immediate rate cuts.
The dollar index rose 0.28% to 97.85, putting it on track for a weekly gain and breaking a two-week losing streak. Still, it remains down nearly 10% for the year amid concerns over the broader economic fallout from U.S. trade policy.
“USD/CAD held on to most of its gains following a strong knee-jerk reaction to the tariff news,” Goldman Sachs analysts led by Stuart Jenkins noted, “though the move was mostly driven by the U.S. dollar leg, with CAD crosses relatively stable.”
In other currency moves, the British pound fell 0.54% to a two-week low of $1.35050 after data showed that the U.K. economy unexpectedly contracted for a second consecutive month in May.
Meanwhile, cryptocurrency markets rallied. Bitcoin rose 3.7% to a new all-time high of $118,832, while Ethereum jumped 5.9% to $2,987.15, as institutional interest and supportive U.S. policy developments continued to drive momentum.
“This latest bitcoin rally shows that global risk appetite remains resilient despite Trump’s tariff escalation,” said Chang Wei Liang, FX and credit strategist at DBS. He pointed to upcoming U.S. legislative efforts during “Crypto Week” in the House of Representatives as further support for the sector.
