The dollar was bid initially as Trump slapped tariffs on all foreign-made cars and light trucks not manufactured in the US. He also reaffirmed reciprocal tariffs to go into effect on 2 April and all of that weighed on market sentiment as well. But as we look towards European trading today, we are seeing calmer heads prevail – at least for now.

The dollar is lower across the board, though still in a modest position on the week. Meanwhile, S&P 500 futures are up 0.2% but it doesn’t take away from the struggle in Wall Street yesterday though. The index closed lower by 1.1%, paring back a decent chunk of the gains this week.

With regards to auto tariffs specifically, the ones hit the hardest will be automakers from Mexico, Japan, and South Korea. Canada is also near the top of the list.

So if you take that into consideration, there might be scope for Trump to dial back on the tariffs before next week’s actual implementation date. And even if not so, Trump’s tariffs implementations always tend to come with some caveats or delay of some sorts.

This time around, he’s been talking a big game about 2 April being “Liberation Day” though. So, we’ll see how much he will follow through on that.

If he does mean business, any market optimism here might be fleeting. US stocks are looking for a reprieve after four consecutive weeks of declines though. So, it may just be a temporary reprieve despite the barrage of tariff headlines this week.

For the dollar itself though, it’s a tricky one as the tariffs will continue to bite at the US economy as well in the short-term. Traders are now seeing ~62 bps of rate cuts by the Fed by year-end. That’s not too much changed from the ~60 bps at the start of the week.