NEW YORK: The dollar experienced a notable decline on Friday, driven by rising growth fears just ahead of a much-anticipated tariff announcement from U.S. President Donald Trump. This uncertainty around potential new tariffs on imports has led investors to seek safer assets, resulting in a notable uptick for the Japanese yen, even as U.S. stocks saw considerable declines and Treasury yields faltered.

Market traders have oscillated between optimism and caution, grappling with the belief that the impending trade levies might not be as harsh as previously anticipated. Nonetheless, lingering fears suggest these tariffs could harm economic growth and potentially reignite inflation, causing some analysts to warn against complacency.

"The overarching sentiment I'm hearing from our clients consistently revolves around one word: uncertainty. This is echoed in conversations from central bankers as well," remarked Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. He emphasized that come April 2, the markets will be met with the implementation of reciprocal tariffs, leaving specifics in a haze.

In a recent announcement, Trump stated that a 25% tariff on imported cars and light trucks would take effect on April 3. Analysts at Bank of America flagged that while selective product tariffs seem to be within market expectations, the implementation of broad tariffs might catch investors off guard. They cautioned, however, that sustained strength for the dollar may not materialize, particularly amid ongoing worries about a slowing U.S. economy.

Adding to the dollar's slump was a report revealing that core inflation had increased by 0.4% in February, a figure surpassing economists’ expectations and intensifying concerns surrounding stagflation. The general inflation rate rose by 0.3%, aligning with forecasts, while consumer spending showed signs of recovery. The University of Michigan's survey further revealed that the public’s expectations for inflation over the next year soared to the highest levels seen in the last two and a half years.

By day's end, the dollar traded at 150.01 yen, marking a decrease of 0.69% against the Japanese currency, which represented the largest single-day drop since early March.

In Japan, data released also indicated that core consumer inflation in Tokyo remained above the central bank's target, gaining momentum in March, a detail that may impact future monetary policies.

The euro, on the other hand, showed some resilience, up 0.2% at $1.0823. This increase has been supported by technical factors as it approached critical resistance points, including its 200-day moving average of $1.0727.

However, inflation figures from Europe painted a more mixed picture. Reports indicated that inflation in France and Spain for March was surprisingly low, contributing to subdued consumer expectations for price growth and strengthening calls for another interest rate cut by the European Central Bank. France’s consumer spending took a hit, coupled with an unexpected rise in Germany’s unemployment rate, heightening concerns over the state of the European economy.

Across the English Channel, the British pound fell 0.09% to $1.2935, even as recent data showed that British consumers unexpectedly increased their spending in the previous month, defying projections for a market contraction.

In the digital currency realm, Bitcoin saw a sharp decline of 4.03%, trading at $83,783. This grim performance comes amid a broader downturn in the cryptocurrency market, highlighting ongoing volatility as investors react to global market pressures.

Stay tuned for further developments as we track these critical economic changes leading up to next week's tariff announcements!