The US dollar has edged lower this week, and amid all the noise affecting financial markets, the foreign exchange market is primarily focused on tariff uncertainty, according to Bank of America Securities.

At 8:20 a.m. ET (13:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.3% higher at 108.045, but remains slightly lower on the week.

Ahead of the presidential inauguration, market speculation that some broader tariff announcements would be on the agenda for "Day 1" sent the Dollar Index to its highest point in 2 years. Since then, with no formal announcements made, the dollar has underperformed other G10 currencies, which have benefited from this mini-relief rally to start the year.

Still, the market remains cautious, analysts at the US bank said in a Jan. 29 note, and the range of possible outcomes is quite wide, with the focus now on the possibility of announcements on Feb. 1, at least for Canada and Mexico.

Indeed, despite no official announcements to date, President Trump has consistently referred to tariffs, including in his speech at the World Economic Forum, and following Treasury Secretary Bessent's statement that he preferred tariffs to increase by 2.5% per month (to 20%).

Much of this discussion has centered on the use of tariff leverage as part of a broader initiative to bring manufacturing to the U.S., with tax cuts as a possible/partial offset/incentive. While anything on this front will likely take time to be implemented in practice, there seems to be no shortage of market-moving headlines. (AL)

Source: Investing.com