Dollar Hits New Highs After Levies Imposed: What This Means for Your Business and Investments
LONDON – The U.S. dollar is set to record its strongest weekly performance in nearly three years against major global currencies, as it sustained momentum on Friday following President Donald Trump’s implementation of new tariff rates on numerous trade partners.
Currencies from the hardest-hit countries experienced sharp declines. Notably, the Swiss franc, facing a 39% tariff, dropped to its weakest level in six weeks. Meanwhile, the Canadian dollar is on track for its seventh consecutive weekly loss.
The dollar’s gains extend beyond tariff impacts. The Japanese yen is headed for its largest weekly loss of the year after the Bank of Japan indicated no immediate plans to raise interest rates. This prompted Finance Minister Katsunobu Kato to express officials’ concerns over currency movements.
Friday also brings the release of the monthly U.S. employment report, which is forecasted to show an addition of 110,000 jobs to the nonfarm payrolls in July.
Much of the dollar’s recent strength stems from investor confidence that the tariffs have not yet derailed the U.S. economy or significantly increased inflation. Despite President Trump’s pressure on Federal Reserve Chair Jerome Powell to cut rates, the Fed has signaled no urgency to do so. According to IG strategist Chris Beauchamp, even a weaker payroll report may have limited impact on this outlook but could trigger some short-term selling of U.S. assets.
“Fundamentally, the U.S. economy is stable—not in great shape but holding up,” Beauchamp said. “Tariffs will cause some pain, but the market may simply use weaker data as an excuse to take profits and wait for clarity.” He added that “a series of severe data would be needed between now and September to justify a rate cut at that time.”
The dollar index, which measures the currency against a basket of six others, is poised to rise 2.4% this week, marking its best weekly gain since a 3.1% rally in September 2022. It last traded up 0.1% at 100.13, its highest level since late May.
Tariff Impact on Currencies
The Swiss franc lost ground across the board, shedding its usual safe-haven status amid selloffs in stocks and commodities triggered by Trump’s steep tariffs and his demand for pharmaceutical companies—key Swiss exporters—to lower prices for U.S. consumers.
The dollar rose as much as 0.6% against the franc to 0.8173, a six-week high, while the euro gained 0.5%, trading at 0.932 francs.
Though the yen remains a traditional safe haven, it was slightly stronger against the dollar on the day, with the dollar down 0.15% to 150.545 yen after earlier reaching its highest level since late March.
The dollar also advanced against the Canadian dollar, which faced a 35% tariff instead of the initially threatened 25%, rising 0.13% to $1.38735.
The euro lingered near an almost two-month low around $1.1408, pressured by market perceptions of an imbalanced trade deal with Washington.
“In the short term, the dollar is likely to strengthen further,” said Mike Houlahan, director at Electus Financial in Auckland. “Most tariff-related news has already been priced in. The notable development this week has been the downward reassessment of the euro, largely due to the EU-U.S. trade deal posing a headwind.”
The EU’s recently agreed framework trade deal with the U.S., announced Sunday, faced immediate criticism from French officials and the German chair of the European Parliament’s trade committee, who described it as unfair to Europe.
Special Analysis by Omanet | Navigate Oman’s Market
The U.S. dollar’s surge, driven by new tariffs and solid economic data, signals increased currency volatility and trade tensions globally. For Omani businesses, this creates both risks in import costs and opportunities in export competitiveness if the Rial remains stable. Smart investors should monitor USD movements closely and consider diversification to hedge against potential currency risk exposure in this turbulent trading environment.
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