By Kevin Buckland and Harry Robertson
TOKYO/LONDON (Reuters) -The dollar traded in narrow ranges against major peers on Thursday, as the currency continued to struggle for direction in the absence of concrete announcements on tariffs from U.S. President Donald Trump.
A spate of central bank policy decisions could move currencies over the next week, with the Bank of Japan widely expected to raise interest rates at the end of a two-day meeting on Friday.
Rate decisions from the U.S. Federal Reserve and European Central Bank are scheduled for Wednesday and Thursday of next week, respectively.
The dollar index – which measures the currency versus six top rivals, including the euro and yen – was last up 0.09% at 108.37 in early European trading.
It tumbled 1.2% on Monday in its steepest one-day slide since November 2023, as Trump’s first day in office brought a barrage of executive orders but none on tariffs.
The dollar had climbed to a more than two-year high of 110.17 on Jan. 13 on the back of a strong U.S. economy and expectations of widespread U.S. tariffs, which could dent other countries’ currencies.
The euro was down 0.15% at $1.0394. The ECB is widely expected to cut rates by a quarter point next week.
So far this week, Trump has mooted levies of around 25% on Canada and Mexico and 10% on China from Feb. 1. He also promised duties on European imports, without giving details.
“President Trump has so far taken a less hostile-than-expected approach to China,” amid overall “softer-than-expected policies and tone on tariffs”, said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
At the same time, “we are cautious (that) risk sentiment remains fragile and can quickly turn sour if President Trump strikes a more aggressive tone”.
Trump on Monday signed a trade memo ordering federal agencies to review a range of trade issues by April 1, which many market participants believe will be a key date in revealing tariff plans.
The dollar was up 0.15% against China’s yuan in offshore trading, at 7.294 yuan. It has fallen around 0.5% against the yuan, also called the renminbi, since Trump’s inauguration.
“There was a fear that there would be big tariffs on day one, that the Chinese renminbi would weaken,” said Jane Foley, head of FX strategy at Rabobank.
“But now you’ve had the news from China overnight about insurers supporting the stock market. You’ve had a different tone, including a call with Trump and Xi (Jinping, China’s president) on Friday, and it’s promoted maybe a different perception of where the opportunities are.”
China announced plans on Thursday to channel hundreds of billions of yuan of investment from state-owned insurers into shares.
Japan’s yen was flat at 156.49 per dollar with markets pricing 96% odds of a quarter-point hike on Friday.
The Canadian dollar slipped slightly to C$1.4394 against the greenback after it and the Mexican peso had a volatile start to the year due to concerns about tariffs.
The Bank of Canada is seen as likely to reduce rates by a quarter point next Wednesday.
The Mexican peso was little changed at 20.49 versus the U.S. currency.
(Reporting by Kevin Buckland in Tokyo and Harry Robertson in London; Editing by Kim Coghill and Ros Russell)
