Dollar falls on recession fears; euro, yen in demand
The U.S. dollar fell Monday amid heightened fears of a U.S. recession and global economic disruptions from the Trump administration’s trade tariffs.
At 05:30 ET (09:30 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, dropped 0.2% to 102.600, after sliding to a six-month low last week, before recovering partly.
Dollar suffers on recession fears
The greenback retreated further Monday after U.S. President Donald Trump doubled down on his trade policies, saying on Sunday that his tariffs were the only means to “cure” massive financial deficits with the likes of China and the European Union, and that they were here to stay.
Concerns are growing that this trade war will hit global economic activity, including in the world’s largest economy, and Goldman Sachs has lifted its odds of a 2025 recession to 45% from 35% a week ago, after hiking its recession forecast last week.
In Europe, EUR/USD traded 0.2% higher to 1.0976, with the single currency benefiting from the dollar weakness, after it had handed back some of the previous week’s strong gains.
GBP/USD traded 0.3% lower to 1.2855, retreating after climbing to its highest level since October at the end of last week.
In Asia, USD/JPY traded 0.7% lower to 145.89, falling to a six-month low on increased safe haven demand for the yen.
The Japanese currency was also buoyed by strong wage data, which increases the odds of an interest rate hike by the Bank of Japan in the near future.
AUD/USD slumped 0.8% to 0.5991, with the risk sensitive Aussie dollar, which often acts as a liquid proxy for the yuan, hit hard.
Australian Treasurer Jim Chalmers warned that the economy could be impacted by the U.S. tariffs due to its exposure to China, and that he expected many more interest rate cuts from the Reserve Bank of Australia this year.
Source: Investing.com
