Dollar Heads for Strong Weekly Gain

The US Dollar Index held mostly flat near 97.8 on Friday, recovering from an initial dip after the Supreme Court struck down President Trump's reciprocal tariffs. While the ruling initially weighed on the greenback by removing an inflationary tailwind, the dollar found support after Trump countered by vowing to sign an executive order for a new 10% global tariff. This swift pivot back to protectionism offset the downbeat Q4 GDP print of 1.4%, which showed the economic toll of the government shutdown and trade duties. The dollar's downside was limited by sticky December core PCE inflation of 3%, reinforcing expectations that the Fed will maintain a restrictive stance. Despite the legal setback for the White House, the prospect of new broad-based levies and persistent price pressures helped the index maintain its footing. The dollar remains on track for a weekly gain as markets balance the potential for tariff refunds against the administration's commitment to stronger trade barriers.

The US Dollar Index eased to 97.7 on Friday, retreating from near one-month highs, after the US Supreme Court struck down President Donald Trump’s global tariffs. The court ruled that Trump exceeded his authority under a federal emergency-powers law by imposing broad “reciprocal” duties worldwide, marking a significant legal setback for the White House. Investors also digested a fresh batch of US economic data and its implications for Fed policy. US GDP grew at an annualized 1.4% in Q4, below the 3% forecast, highlighting slower momentum amid tariffs and the government shutdown. December PCE data showed headline and core inflation accelerating more than expected, while the S&P Global US Composite PMI signaled the slowest private-sector expansion in ten months. Still, the dollar remained poised for a 0.8% weekly gain, supported by FOMC minutes showing some policymakers remain open to further rate hikes if inflation pressures persist.

The dollar index held near 98 on Friday and was set for a roughly 1% weekly gain as investors weighed slowing growth against firm inflation and geopolitical tensions. Data showed the US economy expanded at an annualized 1.4% in the fourth quarter, down sharply from 4.4% in the third and below expectations, raising concerns about momentum amid tariff pressures and a government shutdown. At the same time, personal income and spending rose solidly in December, while both headline and core PCE inflation picked up more than forecast. Minutes from the Federal Open Market Committee revealed some policymakers remain open to further rate hikes if price pressures persist. Markets have reduced bets on aggressive easing but still anticipate two quarter point cuts by year end. Rising tensions with Iran under President Donald Trump also underpinned safe haven demand for US assets.