The U.S. dollar experienced a notable decline against several currencies, including the Swiss franc, Japanese yen, and euro, as market sentiment shifted in response to President Donald Trump’s unexpected tariff decision. On Wednesday, Trump announced a temporary halt to newly imposed tariffs, creating ripples throughout the financial landscape. This 90-day reprieve, however, did little to alleviate the ongoing trade tensions, especially with China, where tariffs have sharply increased.
Dollar Weakens Amid Tariff Uncertainty
The dollar’s value dropped significantly on Thursday, falling 2.36% against the yen to 144.24, and slipping 3.57% against the Swiss franc to 0.83710. This marks the dollar’s most significant one-day loss against the franc since January 2015. As traders reassessed their positions, major U.S. stock indexes, including the S&P 500, Dow, and Nasdaq, also saw declines.
- Key Statistics:
- Dollar down 3.82% against the yen this month.
- Dollar down nearly 6.5% against the Swiss franc this month.
Eugene Epstein, an expert at Moneycorp in New Jersey, noted, “Before yesterday’s 90-day pause, the market was experiencing considerable dislocation. Now, with this temporary halt, traders are recalibrating their strategies.”
Mixed Economic Signals
Recent data from the Labor Department revealed a surprising decline in U.S. consumer prices for March, although experts caution that this improvement may not last due to the ongoing tariff situation. Additionally, a drop in U.S. Treasury yields following a successful auction of 10-year notes added to the dollar’s struggles, with yields decreasing by 4.1 basis points to 4.353%.
In a related development, Ursula von der Leyen, the chief of the European Commission, announced that the EU would hold off on its initial countermeasures against U.S. tariffs in light of Trump’s recent actions. This news contributed to a surge in the euro, which rose 2.3% to $1.121250, marking its largest single-day increase since 2022. The British pound also gained 1.1%, reaching $1.29760.
Risk Currencies Show Strength
Several risk-sensitive currencies enjoyed gains as well. The Australian dollar increased by 0.98% to $0.6211, and the Swedish krona strengthened 1.3% against the dollar, trading at 9.857 crowns.
Meanwhile, the People’s Bank of China has been gradually lowering its guidance for the official yuan rate for six consecutive sessions, indicating a preference for a slow depreciation. Investors remain alert to whether these currency adjustments will play a role in China’s ongoing trade dispute with the U.S. On Thursday, the dollar weakened 0.51% against the offshore yuan, settling at 7.3057, above Tuesday’s record low of 7.4288.
As markets continue to navigate the complexities of international trade and currency fluctuations, analysts urge caution while monitoring developments closely. The evolving landscape underscores the interconnected nature of global economies and the impact of policy shifts on currency values.
