Dollar Falls as Havens Outperform on China Tariffs
The dollar weakened broadly on Tuesday as a White House official said the US is moving ahead with 104% tariffs on China. Haven currencies like the yen and Swiss franc outperformed peers, while the yuan hit a fresh all-time low late in the session.
The Bloomberg Dollar Spot Index fell 0.2% after two days of gains
White House Press Secretary Karoline Leavitt said that because China has not removed its “retaliation tariff,” the US will now impose the total 104% tariff on Chinese imports into the US starting tomorrow, Fox Business reports.
China’s offshore yuan fell 1.1% to 7.4289 per dollar in New York trading on Tuesday, setting an all-time low in the spot currency. The People’s Bank of China had set its daily reference rate for its currency at 7.2038 per dollar earlier in the day, the weakest since September 2023
“One way the Chinese leadership is willing to go about countering tariffs is by lowering the value of their currency, which is what the People’s Bank of China is open to doing,” strategists at Monex wrote
“Markets are hoping that between now and tomorrow there will be an ease of tension as countries have offered a variety of reactions to the proposed increases in commercial trade,” they wrote. “While some nations are considering eliminating most of their tariffs, China has shown willingness to retaliate”
Trump said prospects for a trade deal with South Korea were “looking good” after a phone conversation with acting South Korean President Han Duck-soo
“US trade policy is causing substantial volatility in currency markets and is likely to shift our models towards a bearish US dollar view in the near term,” wrote Invesco’s Alessio de Longis
USD/JPY declined 1.1% to 146.27
USD/CHF dropped 1.3% to 0.8480
EUR/USD rose 0.4% to 1.0956
Source : Bloomberg
