FOREX-Dollar treads water as Trump tariff clarity, central banks awaited

Updates prices ahead of European market open

By Kevin Buckland

TOKYO, Jan 23 (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 are also due 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 =USD - which measures the currency versus six top rivals, including the euro and yen - was flat at 108.31 as of 0551 GMT, following two days of gains of around 0.1%.

On Monday, it tumbled 1.2%, 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.

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 broad trade memorandum, ordering federal agencies to complete comprehensive reviews of a range of trade issues by April 1, which many market participants believe will be a key date in revealing tariff plans.

"With Trump now in the Oval Office, tariffs remain top of the U.S. government's priorities, even if they are not imposed on his first day as president," DBS analysts wrote in a research note.

"At next week's FOMC meeting, the Fed could affirm a longer journey towards achieving the 2% inflation target due to Trump's incoming policies on tariffs and immigration."

The Chinese yuan was little changed at 7.2816 per dollar in offshore trading CNH=D3.

Japan's yen JPY=EBS edged down about 0.1% to 156.69 with markets pricing 96% odds of a quarter-point hike on Friday.

The euro EUR=EBS was little changed at $1.0406. The ECB is widely expected to cut rates by a quarter point next week.

The Canadian dollar CAD=D3 held steady at C$1.4389 against the greenback. The Bank of Canada is seen as likely to reduce rates by a quarter point next Wednesday.

The Mexican peso MXN= was little changed at 20.49 versus the U.S. currency.