Dollar Falls, Yen Surges as US Downturn Fears Rise
A dollar index fell the most in a month on fears that Donald Trump’s sweeping trade tariffs will hurt US and global growth, while the yen surged as investors sought haven assets.
Bloomberg Dollar Spot Index fell 0.6% in Asian trading, the most since March 5; Yen strengthened 1.2% to 147.55 per dollar.
Yield on 10-year Treasuries fell as much as nine basis points to 4.04%.
“Markets flocked to the safe haven currencies as President Trump further ratcheted up the global trade war,” Carol Kong, a currency strategist at Commonwealth Bank of Australia, said. “The safe haven currencies can rally further at the expense of risk currencies like AUD as foreign governments retaliate”.
Trump said he will apply a minimum 10% tariff on all exporters to the US and slap additional duties on around 60 nations to counter trade imbalances with the US. That includes some of the country’s biggest trading partners, such as China — which now faces a tariff of well above 50% — the European Union and Vietnam.
Trump’s announcement will take the average US tariff rate to above levels seen in the 1930s, and “the market reaction suggests that the threat to US growth may be greater than the threat to non-US growth, pushing the US dollar down,” said Shane Oliver, chief economist and head of investment strategy at AMP in Sydney. “This may be getting accentuated as investors see the tariffs reinforcing de-dollarization flowing from less trade with the US leading to less use of US dollars”.
AUD/USD down 0.5% at 0.6270 after falling as much as 1.2% earlier; NZD/USD down 0.2% at 0.5736 after a drop of as much as 1.1%.
Australia’s Prime Minister Anthony Albanese described the 10% tariff on Australian goods as a “poor decision” and said he will not respond with reciprocal levies.
USD/CNH up 0.2% to 73137, paring gain of as much as 0.7% to the highest since Feb. 3.
USD/CHF fell 0.6% to 0.8357.
EUR/USD up 0.6% to 1.0918.
GBP/USD gains 0.4% to 1.3063.
USD/CAD is little changed at 1.4246.
Source : Bloomberg
