By Chibuike Oguh

NEW YORK (Reuters) – The U.S. dollar edged higher against some of its peers including the yen and euro on Thursday as markets weighed fresh tariff threats, slower-than-expected U.S. economic growth, and an interest rate cut by the European Central Bank.

President Donald Trump on Thursday announced that the United States will impose a 25% tariff on imports from Mexico and Canada, reiterating his warning to the two countries, which are top U.S. trade partners.

> “When Trump says something is imminent, the market is reluctant to believe it or to fully embrace it until the orders are signed and the market was definitely caught off guard there,” said Adam Button, chief currency analyst at ForexLive in Toronto.

Commerce Department Data on Thursday revealed that the U.S. economy grew at an annualized rate of 2.3% in the fourth quarter, slightly below analysts’ expectations, amid weak business spending. Inflation edged higher, with the personal consumption expenditures (PCE) price index increasing by 2.5%.

The ECB cut borrowing costs by 25 basis points as expected and left open the possibility of further cuts due to concerns over a lackluster economy outweighing worries about persistent inflation.

The U.S. dollar surged against the Canadian dollar following Trump’s comments, rising 0.55% to C$1.45 per dollar. The dollar weakened by 0.54% to 154.36 against the Japanese yen, while it gained 0.33% against the Swiss franc, reaching 0.91. The euro reversed its earlier gains, dropping 0.24% to $1.0395.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose by 0.2% to 108.12.

> “We did see that spike in the euro, but I was struck by (ECB President Christine) Largarde’s comment that she explicitly said ‘we have not had a discussion on whether it’s time to stop cutting interest rates,'” Button remarked.

The Fed left its benchmark overnight interest rate in the 4.25%-4.50% range on Wednesday, removing the reference that inflation had “made progress” toward the Fed’s 2% inflation goal.

In contrast, central banks in Canada and Sweden both cut rates by a quarter point. Brazil’s central bank raised its rate by a full percentage point to 13.25% overnight and hinted at more hikes to come.

Bank of Japan Deputy Governor Ryozo Himino stated on Thursday that Japan’s central bank would continue raising interest rates if the economy and prices align with the bank’s forecasts.

> “Traders have already moved on from that Fed meeting, so they’ve bought at least another six weeks before having to make a decision probably or looking out toward April or May before we have the next live Fed meeting in my view,” Button added.

Bitcoin gained 1.32% to $105,138.31, while Ethereum rose 3.23% to $3,241.76.

Currency Bid Prices at 30 January 09:41 PM GMT