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The dollar fell on Monday following reports that president-elect Donald Trump’s administration is considering watering down a campaign pledge to apply sweeping tariffs on imported goods.

The US dollar index, which tracks the currency against a basket of six peers, fell 1 per cent in morning trade after The Washington Post reported that potential tariffs may be confined to critical imports.

In November, Trump had promised blanket 10 or 20 per cent duties on all trading partners.

Chris Turner, global head of markets at ING, said the reports had sparked a “relief rally” in the euro against the dollar, with hopes that the region’s automakers could be spared. The tariffs might also “be less inflationary than first expected”, he added.

Shares in European carmakers, which have been hit in recent months by fears they would be targeted by the Trump administration, rallied. The Stoxx Europe 600 Automobiles & Parts index climbed 3.7 per cent, with BMW up nearly 6 per cent.

The euro was up 1.1 per cent against the dollar at $1.042, on track for its best day in more than a year. The single currency had been pushed to a two-year low by trade war worries. The pound, which was the best-performing G10 currency against the dollar last year, rose 1 per cent to $1.254.

Monday’s reports were “triggering some relief among investors that the initial tariffs won’t be as bad as feared”, sparking a “sharp reversal of recent US dollar gains,” said Lee Hardman, senior currency analyst at MUFG. More focused tariffs would help “to dampen [their] disruptive impact,” he added.

US government bonds, which have sold off in recent months as investors girded for higher inflation driven by broad tariffs, regained a little ground. The yield on the two-year US government bond, which moves with rate expectations, was down 0.02 percentage points at 4.26 per cent, as the price of the debt rose.

The dollar sell-off comes after a strong rally for the world’s de facto reserve currency that began in early October, as the market began to price in a greater prospect of a Trump election win. “The market had correctly anticipated a Trump victory,” said Jane Foley, senior FX strategist at Rabobank.

Analysts and economists expect Trump’s pro-growth, potentially inflationary policies, to limit the number of times that the US Federal Reserve will cut interest rates next year, boosting demand for the dollar relative to other major currencies. This was compounded by investor bets that the negative growth impact for the Eurozone would prompt the European Central Bank to cut rates more aggressively.

In mid-December, the Fed published economic forecasts that suggest interest rates will fall in 2025 by less than previously hoped. Last week, a top Fed official warned about the threat of resurgent US inflation after Trump takes power.

Investors expect the US central bank to cut rates at least once this year, with a 70 per cent chance of a second quarter-point cut. That probability increased slightly on Monday.

Expectations of interest-rate cuts by the European Central Bank were slightly pared back, with just under four quarter-point cuts priced in this year.

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Today’s top stories

Today is Jan. 6, the day Congress is scheduled to certify President-elect Donald Trump’s victory in the Electoral College. The atmosphere is expected to be very different from four years ago, when a mob of Trump supporters stormed the U.S. Capitol. Around 140 police officers were injured. While the FBI has classified the attack as an act of domestic terrorism, Trump has referred to it as a “day of love.” He has also promised to pardon people charged for their involvement in the attack.

• 🎧 When Trump ran for president again, he embraced the idea that the violence on Jan. 6, 2021, was overblown and said there were no guns. NPR’s Tom Dresibach tells Up First that this claim is false. Trump also said his supporters at most “got a little out of hand” — a narrative that judges who heard the more than 1,500 cases have dispelled. Trump promised pardons on Day One in office but has been vague about who would receive them. Aquilino Gonell, who was a Capitol Police sergeant during the attack and whose injuries forced him to retire, says he feels betrayed by the election. “What did I risk my life for?” Gonell says.
• ➡️ Some of the people who stormed the Capitol believed in the QAnon conspiracy theory that claims Trump is involved in a secret battle against evil members of the alleged deep state. After the attack, multiple social media platforms pushed to ban QAnon content. Here’s why it hasn’t gone away.
• ➡️ There are subtle ways this year’s certification process will differ from 2021’s due to Congress passing new rules. These are some of the key changes.

CNN is fighting a defamation lawsuit in court today. After the Taliban took control of Afghanistan in 2021, CNN reported as part of its investigation into claims of “black market rescues” that a security consultant was among those offering to evacuate people desperate to flee the country — for a price. When the story aired, a photo of Zachary Young, a security contractor who had offered to evacuate people from Afghanistan, was shown. Young says he sued CNN to clear his name.

• 🎧 Young’s attorneys say his character was maligned, and he wasn’t doing it for individuals but for deeper-pocketed organizations like U.S. and European nongovernmental organizations. His attorneys claim he lost millions of dollars due to this story, according to NPR’s David Folkenflik. CNN apologized some months after the story first appeared, saying it shouldn’t have applied the “black market” label to Young. The network’s lawyers have taken a more aggressive tone, saying Young lied to CNN reporters and that the network couldn’t confirm he evacuated anyone as he claimed. Behind the scenes, some editors at CNN have expressed misgivings about the reporting.

The 82nd Golden Globes took place last night in Beverly Hills. Comedian Nikki Glaser hosted. The queer musical-thriller Emilia Pérez took home the move movie awards, including one for best musical or comedy film. On the television side, FX’s Shōgun led wins and took home awards in every category it was nominated for. Here’s the full list of last night’s winners.

• 🎧 Though Emilia Pérez‘s big wins were no surprise, says NPR’s Mandalit del Barco, who was inside the ballroom at the Beverly Hilton Hotel last night, there were some surprising moments. The movie musical Wicked only took home one win for its box office achievement. In 2022, the Globes faced criticism after the Los Angeles Times reported there were no Black members of the Hollywood Foreign Press Association, which used to hand out these awards. The organization has since been bought and formally disbanded. The number and types of voting members have been expanded to include more than 300 entertainment journalists from around the world.

Today’s listen

Palestinian artist Tamer Nafar performs during a festival in the town of Sakhnin in northern Israel on Oct. 23, 2016.

Ahmad Gharabli/AFP via Getty Images

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The Arabic and Hebrew music landscape has been shaken up by the Israel-Hamas war. NPR’s Daniel Estrin says he didn’t listen to music for a long time after the Oct. 7 attacks as he just couldn’t stomach it. The music scene also reflected this. First, there was shock, then silence, as many musicians were not writing. Now, there is a burst of new music. Estrin spoke with Israeli music critic Einav Schiff and Palestinian musician Tamer Nafar about some of the songs on their playlists and to reflect on over a year of war.

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Jossiel Estefes “Onex stands beside his bike in a gas station in Connecticut during a ride.

Mayolo López Gutiérrez

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Mayolo López Gutiérrez

Brothers Andrés and Eddie Lucero founded the South Bronx-based Aztec Rebels motorcycle club in 2016 after learning about the culture and politics of another Bronx-based motorcycle club. They dreamt of developing a space where they could hear their own music, speak their language and be understood. They started with five founding members. Since then, they have expanded to more than 20 full members. “People are always looking for a family, and that’s why sometimes they get into gangs. We want to be that place where Mexicans can come and be in a safe environment, without violence, but with a family,” Eddie says.

3 things to know before you go

A team of 100 researchers from the Universities of Birmingham and Oxford uncovered around 200 dinosaur footprints along five trackways in southeast England during a week-long excavation in June 2024.

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1. Researchers found around 166-million-year-old footprint tracks at a limestone quarry in southeast England, providing insights into certain dinosaurs’ size and speed. Five trackways were uncovered: Four are suspected to be the giant 60-foot, 2-ton Cetiosaurus and the fifth a Megalosaurus.
2. Congestion pricing was introduced yesterday in the center of New York City. The measure, which charges many drivers $9 to enter Manhattan at peak hours, went through despite a late attempt by New Jersey to stop it in court.
3. A Pulitzer Prize-winning cartoonist has resigned from the Washington Post after the editorial page editor rejected her cartoon depicting media and tech giants submitting to President-elect Donald Trump.

This newsletter was edited by Suzanne Nuyen.