BUZZ-COMMENT-Dollar downside may be over in short run

Jan 28 (Reuters) - Overnight reports that President Donald Trump's administration is looking to impose universal tariffs provides a reminder as to why it is difficult to maintain dollar weakness.

According to the FT, U.S. Treasury Secretary Scott Bessent is mulling a gradual rise in universal tariffs starting from 2.5% and increasing by the same amount each month. However, Trump has said he wants a much bigger tariff than 2.5%, which in turn has prompted a modest bid in the dollar.

Given this backdrop, downside in the dollar should be limited, particularly in the lead-up to Feb. 1, which Trump has previously signalled as a date to impose 25% tariffs on Canada and Mexico.

While a cleansing of positions is likely to have played a part in the recent dollar pullback, the case for an extension lower remains a weak one.

Another factor that may underpin the dollar in the short-run is corporate month-end, set to take place on Wednesday. Corporate month-end occurs two days before the final trading day of the month, which typically entails large U.S. corporations hedging global revenues and thus coincides with supportive flows into the dollar.

This is more clearly observed against sterling and the yen, where both currencies are down against the greenback circa 7% and 15% respectively since 2010. With this mind, risks are skewed towards a rebound in the dollar in the short-run.

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