Published by Global Banking and Finance Review
Posted on January 20, 2025
5 min readLast updated: January 27, 2026
The US dollar fell as Trump's administration delayed tariffs, causing a rally in foreign currencies. Markets are focused on Trump's economic policies.
By Gertrude Chavez-Dreyfuss and Stefano Rebaudo
NEW YORK/MILAN (Reuters) -The dollar dropped on Monday after news President Donald Trump's new administration will not immediately impose trade tariffs, prompting a rally in the currencies of some of the country's trade partners, even as he vowed to sign a slew of executive orders on Day one that echoed many of his campaign promises.
Trump will issue a broad trade memo on Monday that stops short of imposing new tariffs on his first day in office, an official for the new Trump government said. Trump mentioned no specific tariff plans in his inaugural address, but repeated his intention to create the External Revenue Service, a new agency to collect "massive amounts" of tariffs, duties and other revenues from foreign sources.
Sworn in as the 47th president of the United States, Trump, in his half-hour speech, listed a series of executive actions he intends to take immediately on Monday, including declaring a national emergency at the U.S.-Mexico border and dispatching troops there.Market participants had been expecting Trump to announce trade tariffs via executive orders. Such a move would have increased expectations for a large-scale campaign, rising inflation and higher-for-longer Federal Reserve policy rates.
"There is a relief rally in foreign currencies, right now," said Marc Chandler, chief market strategist, at Bannockburn Global Forex in New York.
"Even though Trump did not specify, it's very clear that when he says that the U.S. is going to be a big auto manufacturer, he's talking about tariffs. So whether he imposes them on Day 1 or Day 5 or Day 10, I'm not sure it makes that much of a difference," he added.The dollar index, which measures the U.S. currency against six others, fell by as much as 1.3% and was last down 1% at 108.26. It hit a 26-month high last week of 110.17.
Against the Canadian dollar, the greenback fell 1.3% to C$1.4295, after earlier hitting its weakest level since mid-December.
Trading volume was lighter than usual due to U.S. markets being closed for the Martin Luther King Jr. Day holiday. Since the November presidential election, the greenback has risen 4% as traders anticipate Trump's policies will boost growth and inflation.
Investors' attention was firmly fixed on the policies Trump will enact on his first day in office. At a rally on Sunday, Trump said he would impose severe limits on immigration.
Some analysts were expecting Trump to invoke the International Emergency Economic Powers Act (IEEPA).
IEEPA is a federal law in the U.S. that grants the president the authority to regulate economic transactions in response to unusual and extraordinary threats.
Along with tariffs, immigration and tax cuts will be the main issues under market scrutiny.
On the fiscal front, "we will be watching to see if President Trump mentions fiscal stimulus," said Ajay Rajadhyaksha, research analyst at Barclays.
The euro rose 1.2% to $1.0394. It hit a two-year low of $1.0177 last week.
Meanwhile softer U.S. inflation data and the prospect of multiple Fed rate cuts have recently boosted risk assets, including bitcoin, which hit a record high on Monday at $109,071.86 and was last down 1.8% at $102,745.83.
Trump has promised to be a "crypto president", and is also expected to issue executive orders aimed at promoting widespread adoption of digital assets.
The president's new cryptocurrency launched on Friday - known as $TRUMP - soared to nearly $12 billion in market value, drawing billions in trading volume by Monday. First Lady Melania Trump's rival token launched on Sunday hit a market cap of $1.9 billion.
Meanwhile, the dollar slid 0.6% against the Chinese yuan to 7.2790, after earlier falling to its lowest since mid-December.
The Chinese unit has outperformed most of its peers since the U.S. elections despite expectations for strong U.S. tariffs, as the People's Bank of China has continued efforts to maintain currency stability.
Japan's yen also held firm, leaving the dollar down 0.4% at 155.745 ahead of the Bank of Japan's policy meeting this week at which it is widely expected to raise interest rates.
Currency
bid
prices at
20
January
07:49
p.m. GMT
Descripti RIC Last U.S. Pct YTD Pct High Low
on Close Change Bid Bid
Previous
Session
Dollar 108.05 109.33 -1.16% -0.41% 109.34 107.
index 94
Euro/Doll 1.0416 1.0271 1.43% 0.63% $1.043 $1.0
ar 266
Dollar/Ye 155.61 156.205 -0.35% -1.07% 156.48 155.
n 455
Euro/Yen 162.08 160.5 0.98% -0.7% 162.31 160.
32
Dollar/Sw 0.9066 0.915 -0.93% -0.11% 0.915 0.90
iss 65
Sterling/ 1.2328 1.2169 1.34% -1.41% $1.2331 $1.2
Dollar 16
Dollar/Ca 1.4298 1.4485 -1.26% -0.54% 1.4486 1.42
nadian 62
Aussie/Do 0.6271 0.619 1.34% 1.38% $0.6287 $0.6
llar 19
Euro/Swis 0.9441 0.9395 0.49% 0.51% 0.946 0.93
s 96
Euro/Ster 0.8443 0.8441 0.02% 2.05% 0.8473 0.84
ling 37
NZ 0.5673 0.5585 1.6% 1.4% $0.568 0.55
Dollar/Do 81
llar
Dollar/No 11.2832 11.4457 -1.42% -0.73% 11.4324 11.2
rway 878
Euro/Norw 11.7638 11.7571 0.06% -0.04% 11.796 11.7
ay 498
Dollar/Sw 11.0183 11.1795 -1.44% 0.01% 11.1921 10.9
eden 979
Euro/Swed 11.4774 11.4911 -0.12% 0.09% 11.512 11.4
en 674
(Reporting by Stefano Rebaudo in Milan and Gertrude Chavez-Dreyfuss in New York; Additional reporting by Amanda Cooper in London; Editing by Christina Fincher and Nick Zieminski)
The US dollar fell after news that President Trump's administration would delay the imposition of trade tariffs, leading to a rally in foreign currencies.
Trump announced a series of executive actions, including a broad trade memo that stops short of imposing new tariffs.
The euro rose 1.2% to $1.0394, recovering from a two-year low of $1.0177 hit last week.
IEEPA is a federal law that allows the president to regulate economic transactions in response to extraordinary threats, which some analysts expected Trump to invoke.
Softer U.S. inflation data and the prospect of multiple Federal Reserve rate cuts have boosted risk assets, including cryptocurrencies like bitcoin.
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