The dollar fell against a basket of the other major currencies on Friday, hitting its lowest levels in over a year against the yen amid fears that proposed new steel and aluminum tariffs could start a trade war.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.3% to 89.95 in late trade.

Investor sentiment was hit by fears that President Donald Trump’s proposal to impose heavy tariffs on steel and aluminum imports could drag the U.S. into a trade war with major trade partners such as China, the European Union and Canada.

Those countries, which are major holders of U.S. Treasury’s, could protest the measures by reducing their holdings of U.S. assets.

The dollar had risen to multi-week highs on Thursday after strong U.S. economic data and an upbeat assessment of the economy from Federal Reserve Chairman Jerome Powell underlined expectations for a faster pace of rate hikes this year.

The dollar fell sharply against the Japanese yen. USD/JPY plumbed a low of 105.25, the weakest level since November 2016 and was last down 0.44% at 105.74.

The yen had already been boosted after Bank of Japan Governor Haruhiko Kuroda said the central bank would discuss an exit from its current aggressive monetary easing in 2020 if it met its 2% inflation target.

The euro moved higher, with EUR/USD climbing 0.43% to 1.2316 as investors looked ahead to the outcome of Sunday’s Italian elections.

Sterling was also higher against the weaker dollar, with GBP/USD rising 0.2% to 1.3800.

In the coming week, investors will be focusing their attention on the U.S. employment report for February, particularly after stronger than expected wage growth figures in the last jobs report fed into major market turbulence.

Traders will also be watching developments on the proposed trade tariffs and central bank meetings in the euro zone and Japan.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, March 5

China is to publish its Caixin services index. The UK is to publish its services PMI. The Institute of Supply Management is to publish its non-manufacturing PMI. Later in the day, Federal Reserve Governor Randal Quarles is to speak at an event in Washington.

Tuesday, March 6 Australia is to release data on retail sales and the current account. The Reserve Bank of Australia is to announce its benchmark interest rate and publish a rate statement which outlines economic conditions and the factors affecting the monetary policy decision.

Wednesday, March 7

Australia is to release figures on fourth quarter growth. The Reserve Bank of Australia is to announce its benchmark interest rate and publish a rate statement which outlines economic conditions and the factors affecting the monetary policy decision. Australia is to release figures on fourth quarter growth. The UK is to publish an industry survey on house price inflation. The U.S. is to release the ADP nonfarm payrolls report for February. Canada and the U.S. are to publish trade data. The Bank of Canada is to announce its benchmark interest rate and publish a rate statement.

Thursday, March 8

Both China and Australia are to release trade data. The ECB is to announce its latest monetary policy decision. The announcement is to be followed by a press conference with President Mario Draghi. Canada is to publish data on building permits and new house price inflation. The U.S. is to produce the weekly report on jobless claims.

Friday, March 9

China is to release data on consumer and producer price inflation. The Bank of Japan is to announce its benchmark interest rate and publish a rate statement which outlines economic conditions and the factors affecting the monetary policy decision. The announcement is to be followed by a press conference. The UK is to release data on manufacturing production and trade. Canada is to publish its latest employment report. The U.S. is to round up the week with the non-farm payrolls report for February.

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