The Japanese yen and Swiss franc continued to benefit from appetite for safe-havens, however, as investors remain concerned about the potential for a global recession.
Markets are bracing for a war of attrition between the U.S. and China. Beijing has refused to bow to what it called “blackmail” and vowed to “fight to the end” after Trump threatened to ratchet up tariffs to 104% in response to China’s decision to match “reciprocal” duties Trump announced last week. Trump said on Tuesday that he is waiting to hear from China before duties take effect.
China’s offshore yuan hit its lowest level since it started trading in 2010 at 7.3815.
The dollar weakened 0.53% to 147.06 yen against the Japanese yen and was down 0.33% to 0.857 franc against the Swiss franc
On Tuesday, the euro was last up 0.1% at $1.091375, down from an earlier rise of more than 0.7%, after falling for the two previous days. Marvin Loh, senior global market strategist at State Street in Boston, said the dollar’s underperformance against its peers has been partly driven by recession worries in face of tariffs. Currencies that often fare well when stock markets are rising also recovered, with the pound up 0.37% and the Australian dollar 0.58% higher after both dropped in the previous two sessions.
Investors on Tuesday gleaned some positive signs from the Trump administration about tariff talks. Treasury Secretary Scott Bessent said on Monday he hoped negotiations would bring levies down. Trump said Japan was sending a team to start negotiations, helping Japanese equities rally sharply overnight.
On Wall Street, all three main indexes were trading higher after falling sharply last week following Trump’s tariff announcement.
“When you kind of look at it over the course of the last week, the dollar and Treasury yields haven’t really responded as aggressively as you would think given how the move on the equity side of things has been,” Loh added.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.11% to 103.32.
The index has fallen around 0.7% since Trump announced the tariffs on April 2, as investors have weighed up the hit to the U.S. economy against the currency’s typical role as a shield from market slumps.
(Reporting by Harry Robertson in London and Chibuike Oguh in New York, additional reporting by Ankur Banerjee in Singapore; Editing by Aidan Lewis, Shri Navaratnam, Rachna Uppal, Peter Graff and Sharon Singleton)
