Dollar's Decline Drives Investor Uncertainty Amid Trump's Tariff Turmoil

The U.S. dollar stumbled toward its fifth consecutive monthly decline on Friday, fueled by lingering uncertainties over trade policies and fiscal health. Investors are bracing for pivotal inflation reports later in the day, following a whirlwind week where the greenback ended lower after a federal court temporarily reinstated President Donald Trump's sweeping tariffs, just a day after they had been blocked.

In a bid to support his trade agenda, Trump expressed hope that the Supreme Court might overturn the trade court's decision, while officials hinted at using other presidential powers to ensure the tariffs take effect. This unpredictability has pushed investors away from U.S. assets as they search for more stable alternatives amid concerns over the resilience of U.S. markets.

Investor eyes are also on the Federal Reserve's preferred inflation measure, the personal consumption expenditure (PCE) report, as signs of a potential U.S. economic downturn loom, exacerbated by fiscal debt worries in developed economies. Meanwhile, emerging market assets have caught attention, as an index tracking these currencies showed its largest one-month gain since November 2023.

(With inputs from agencies.)