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Trump calls for lower rates globally, threatens tariffs

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Dollar has fallen since Trump's inauguration on Monday

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Bank of Japan widely expected to raise rates on Friday

(Updates to afternoon U.S. trading)

By Chuck Mikolajczak

NEW YORK, Jan 23 (Reuters) - The dollar was modestly

lower on Thursday in a choppy session, after comments from U.S.

President Donald Trump called for lower interest rates while

providing no clarity on tariffs, and investors awaited a round

of policy announcements from global central banks.

The dollar is down more than 1% on the week, largely due to

a sharp drop on Monday as widely expected tariff announcements

from Trump failed to materialise after his inauguration. The

dollar has moved only slightly in the sessions since.

The greenback swung between gains and losses on the day

as Trump demanded the world drop interest rates in a speech to

global business and political leaders in Davos, Switzerland. He

also warned they will face tariffs should they make their

products anywhere but the U.S.

Despite frequently mentioning tariffs, Trump again

declined to give specifics of any duties he intends to put in

place.

"We don't have any truly certain information to go off

of, so until we have a definitive answer, we'll continue to see

a little more volatility," said David Eng, Investment Adviser at

Sonora Wealth Group in Vancouver.

"It seems like the markets are more concerned about rate

cuts and any kind of greater indicator that there'll be more

rate cuts."

Investors are awaiting a host of policy decisions from

global central banks 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 (ECB) are scheduled for Wednesday and Thursday of

next week, respectively.

Markets are pricing in a nearly 96% chance the ECB will cut

rates at its meeting, with recent comments from the central

bank's policymakers indicating a cut was likely.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

shed 0.19% to 108.06, with the euro up 0.14% at $1.0422.

The greenback tumbled 1.2% on Monday in its steepest one-day

slide since November 2023, as Trump's first day in office came

with a slew of executive orders but no tariffs.

The dollar had climbed to a more than two-year high of

110.17 on Jan. 13 on a resilient U.S. economy and expectations

of widespread U.S. tariffs, which could weigh on the currencies

of other countries.

Data on Thursday showed new applications for U.S.

unemployment benefits rose marginally last week, suggesting that

solid job growth likely continued in January.

Trump said this week that his administration was looking

into imposing a 10% tariff on goods imported from China on Feb.

1, after he earlier said Mexico and Canada could face levies of

around 25% by that date. He also promised duties on European

imports, without providing details.

On Monday Trump 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.

Sterling strengthened 0.31% to $1.2354. The Mexican peso

strengthened 0.92% versus the dollar to 20.329.

The Canadian dollar gained 0.16% to C$1.435 per

dollar. Canada's central bank is largely expected to cut rates

at its policy meeting next week after inflation data earlier

this week came in below its target rate of 2%.

The Japanese yen firmed 0.33% against the

greenback to 155.99. The dollar edged up 0.06% to 7.282 versus

the offshore Chinese yuan.

China announced plans on Thursday to channel hundreds of

billions of yuan of investment from state-owned insurers into

shares.