By Chibuike Oguh
NEW YORK (Reuters) - The U.S. dollar edged higher against some of its peers including the yen and euro on Thursday as markets weighed fresh tariff threats, slower-than-expected U.S. economic growth, and an interest rate cut by the European Central Bank.
President Donald Trump on Thursday said the United States will put a 25% tariff on imports from Mexico and Canada, repeating his warning to the two countries which are top U.S. trade partners.
"When Trump says something is imminent, the market is reluctant to believe it or to fully embrace it until the orders are signed and the market was definitely caught off guard there," said Adam Button, chief currency analyst at ForexLive in Toronto.
Commerce Department data on Thursday showed the U.S. economy grew by an annualised 2.3% in the fourth quarter, slightly below analysts' expectations, amid weak business spending. Inflation edged higher, with the personal consumption expenditures (PCE) price index rising 2.5%.
The ECB cut borrowing costs by 25 basis points, as widely expected, and left the door open to further cuts as concerns over a lacklustre economy supersede worries about persistent inflation.
The U.S. dollar jumped sharply against the Canadian dollar following Trump's comments. It was up 0.55% to C$1.45 per dollar.
The greenback weakened 0.54% to 154.36 against the Japanese yen. Against the Swiss franc, the dollar strengthened 0.33% to 0.91. The euro reversed earlier gains and was down 0.24% at $1.0395.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.2% to 108.12.
"We did see that spike in the euro, but I was struck by (ECB President Christine) Largarde's comment, where she explicitly said 'we have not had a discussion on whether it's time to stop cutting interest rates,'" Button said.
The Fed on Wednesday left its benchmark overnight interest rate in the 4.25%-4.50% range, with officials removing the reference that inflation having "made progress" toward the Fed's 2% inflation goal.
By contrast, other central banks including Canada and Sweden both cut rates by a quarter point. Brazil's central bank hiked by a full percentage point to 13.25% overnight and flagged more to come.
Bank of Japan Deputy Governor Ryozo Himino said on Thursday that Japan's central bank would continue to raise interest rates if the economy and prices move in line with the bank's forecasts.
"Traders have already sort of moved on from that Fed meeting, so they've bought at least another six weeks before having to make a decision probably or looking out toward April or May before we have the next live Fed meeting in my view," Button said.
Bitcoin gained 1.32% to $105,138.31. Ethereum rose 3.23% to $3,241.76.
Currency bid prices at 30 January 09:41 p.m. GMT
Description RIC Last U.S. Close Previous Session Pct Change YTD Pct High Bid Low Bid
Dollar index 108.14 107.9 0.24% -0.32% 108.25 107.5
Euro/Dollar 1.0391 1.0422 -0.29% 0.37% $1.0468 $1.0387
Dollar/Yen 154.33 155.335 -0.59% -1.87% 154.895 153.83
Euro/Yen 160.36 161.75 -0.86% -1.75% 161.78 160.24
Dollar/Swiss 0.91 0.9068 0.36% 0.28% 0.9102 0.906
Sterling/Dollar 1.2419 1.2446 -0.18% -0.67% $1.2477 $1.2412
Dollar/Canadian 1.4508 1.4422 0.6% 0.9% 1.4596 1.4395
Aussie/Dollar 0.6206 0.623 -0.37% 0.31% $0.6242 $0.6199
Euro/Swiss 0.9456 0.9448 0.08% 0.67% 0.9485 0.9439
Euro/Sterling 0.8362 0.8367 -0.06% 1.08% 0.8389 0.836
NZ Dollar/Dollar 0.5632 0.5658 -0.37% 0.74% $0.5667 0.5629
Dollar/Norway 11.325 11.2833 0.37% -0.36% 11.3385 11.2634
Euro/Norway 11.771 11.762 0.07% 0.01% 11.798 11.743
Dollar/Sweden 11.045 10.9958 0.45% 0.25% 11.0628 10.9739
Euro/Sweden 11.478 11.4621 0.14% 0.1% 11.4936 11.4475