Citi Thinks April 02 Tariffs Will Boost the Dollar - Pound Sterling LIVE

What the desk is arguing

The desk interprets Citi's viewpoint as suggesting the implementation of new tariffs could prompt a dollar rally through enhanced trade competitiveness. Tariffs generally create a more favorable environment for domestic producers, which may subsequently lead to improved balance of trade metrics and support for the USD.

Furthermore, historical precedents indicate that when tariffs are enacted, markets often react by increasing demand for the dollar due to its perceived safe-haven status. As a result, Citi's insights correlate with potential upward pressure on the dollar, particularly as market participants position themselves ahead of these tariffs.

Where it sits in our coverage

Currently, our consensus target for the USD is set at 1.075, with a range from 1.04 to 1.12. Key players in this space include: - jpmorgan: target at 1.10 (Mar26) - bofa: target at 1.04 (Mar26)

This perspective aligns well with jpmorgan's bullish stance on the dollar, particularly as the outlook risks pushing against the lower end of the range, given the anticipation surrounding the tariff announcement.

How other firms see it

Firms aligned with Citi such as jpmorgan believe the tariffs will enhance dollar strength, while bofa holds a contrary view, suggesting caution due to potentially adverse economic impacts that could outweigh the benefits.

Traders should also keep an eye on other dollar-related pairs like USD/JPY or EUR/USD, where shifts in U.S. monetary policy or unexpected trade disruptions could also influence movements in these currencies.