FOREX-US dollar sags as caution persists ahead of Trump's tariff announcement

By Gertrude Chavez-Dreyfuss and Harry Robertson

NEW YORK/LONDON, April 2 (Reuters) - The U.S. dollar fell against major currencies such as the euro, yen and sterling on Wednesday, as traders awaited details of U.S. President Donald Trump's plans for tariffs, which could upend the global trading system and shake financial markets.

The euro EUR=EBS last bought at $1.0825, up 0.3% against the dollar, while sterling GBP=D3 edged up 0.1% to $1.2940 ahead of a White House Rose Garden announcement scheduled for 2000 GMT that will likely see the imposition of steep new duties on U.S. imports.

Trump has for weeks trumpeted April 2 as "Liberation Day", and White House spokeswoman Karoline Leavitt said reciprocal tariffs on countries that impose duties on U.S. goods would take effect immediately after Trump's announcement.

"The dollar is starting 'Liberation Day' off on the back foot, and it's probable that markets are anticipating yet another last-second walkback of tariffs," said Helen Given, director of trading, at Monex USA in Washington.

"The White House and Trump's rhetoric on what tariffs will be levied this afternoon have been a bit at odds with each other, so traders are moving very cautiously ahead of this afternoon."

Against the yen, the dollar was little changed at 149.53 as investors moved modestly into the safe-haven Japanese currency JPY=EBS.

The Australian dollar AUD=D3 was up 0.3% at US$0.6296, potentially boosted by investors seeking out currencies that are less exposed to tariffs.

Details about the size and scope of the trade barriers set to come into force remain unknown, but the Washington Post reported that Trump's aides were considering a plan that would raise duties on products by about 20% from nearly every country, rather than targeting certain countries or products.

"A wide blanket tariff globally capturing all the major trading partners with a 20%-25% tariff would be seen as most aggressive and likely elicit the biggest risk-off reaction," said Derek Halpenny, head of research at MUFG.

"But there has been speculation that discussions on trade deals could exclude certain countries ... and the more examples of that, the better the markets can take the announcements," he said, citing Britain as one country that may get a carve-out.

Worries about the impact of an escalating global trade war on the world's largest economy and a slew of weaker-than-expected U.S. data have stoked recession fears and in turn undermined the dollar this year.

Given nervousness about the tariff announcement, the dollar reacted little to data showing U.S. private payrolls increased more than expected in March. Private payrolls rose by 155,000 last month after an upwardly revised 84,000 rise in February, according to the ADP National Employment Report

Economists polled by Reuters had forecast private employment advancing 115,000 following a previously reported 77,000 gain in February.

The dollar slid 0.2% against a basket of currencies to 103.98 =USD. That comes after the greenback dropped 3.1% in March, its worst monthly performance since November 2022.

Data on Tuesday showed U.S. manufacturing contracted in March, while a measure of inflation at the factory gate jumped to the highest level in nearly three years amid rising anxiety over import tariffs.

"While a 20% blanket tariff rate would be theoretically seen as a net positive for the U.S. dollar, the market is most intently focused on whether tariffs accelerate the stagflation risk in the U.S. economy," said Chris Weston, head of research at Pepperstone.

Elsewhere, the greenback was up 0.2% versus the Canadian dollar =D3> at C$1.4328, rising 0.3% against the Mexican peso MXN= to 20.406 pesos.

Canadian Prime Minister Mark Carney spoke with Mexican President Claudia Sheinbaum on Tuesday about Canada's plan to "fight unjustified trade actions" by the United States, the prime minister's office said.

Bank of Japan Governor Kazuo Ueda meanwhile said on Wednesday that planned new U.S. tariffs could have a huge impact on world trade, warning of a possible hit to global growth.