China increased its tariffs on U.S. imports to 125% from 84% on Friday, retaliating against U.S. President Donald Trump’s decision to hike duties on Chinese goods to a total of 145% after pausing his latest tariff hikes on most countries.
That added to a global selloff that has battered stocks and even once safe-haven U.S. Treasuries – 10-year yields are on course for their biggest weekly jump since 2001.
On Wall Street, the benchmark S&P 500, Dow and the Nasdaq were all trading lower, although they were set to end the week higher.
“Part of the dollar weakness in the past few weeks has been linked to worries over a recession or the Fed cutting rates, but it’s kind of gone beyond that,” said Win Thin, global head of markets strategy at Brown Brothers Harriman in New York.
“It’s more really of loss of confidence and credibility in the dollar and then in U.S. policy-making. Typically in risk-off episodes, dollar should gain as a safe haven but it’s really been the yen and Swiss franc that has been picking that up and the dollar has been under pressure.” Data on Friday showed that U.S. consumer sentiment deteriorated sharply in April while 12-month inflation expectations surged to the highest level since 1981 amid unease over escalating trade tensions. The dollar was down 1.11% at 0.814 against the Swiss franc , extending losses in the previous session when it plunged to its lowest since January 2015. It is on track for biggest weekly drop since November 2022.
The greenback was down 0.66% at 143.43 yen after hitting its lowest since September 2024. It is set for its largest weekly drop since February this year.
Gold soared past the $3,200 mark, hitting a fresh new high supported partly by the dollar weakness. Spot gold rose 1.99% to $3,236.91 an ounce.
European Central Bank President Christine Lagarde on Friday said the central bank was ready to deploy its instruments to maintain financial stability and had a solid track record in devising tools when required to deal with turbulence.
The euro surged 1.12% to $1.136025, after hitting its highest since February 2022. It is on track for its biggest weekly gain since early March this year.
The single currency also rose 0.68% against the pound in a sign of its outperformance. The pound was up 0.65% against the dollar, at $1.30520.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.47% to 100.05 – hitting its lowest since April 2022. It is on track for its biggest weekly drop since early March this year.
China’s yuan fell sharply against the euro, which hit an 11-year high against the currency in the offshore market.
This week, it fell to its weakest on record against the dollar, both onshore and offshore, though it has since rebounded. The dollar was last down 0.29% against the offshore yuan at 7.2919.
“I’m deeply concerned about a lack of confidence among investors in the U.S. now,” said Nomura strategist Naka Matsuzawa. “It’s a no-confidence vote from not just the equity market but also Treasury market participants in the Trump administration and its policies.”
