Dollar trades lower, euro gains after Merz elected German chancellor
The U.S. dollar traded lower against major currencies including the yen on Tuesday amid market jitters over hoped-for U.S. trade deals, while the euro extended gains after the German parliament elected conservative leader Friedrich Merz as chancellor.
Investors are waiting to see if President Donald Trump’s administration provides details on trade deals it is reportedly negotiating with other countries, including China. Trump indicated on Sunday that some trade deals would be announced this week.
“The market is getting nervous that we’re starting to eat away at the schedule since the 90-day tariff reprieve without anything meaningful being announced,” said Eugene Epstein, head of structuring for North America at Moneycorp.
“There’s a lot of good sentiment but because of a distinct lack of formal substance that I’ve seen, I think the market is starting to get uneasy again.”
The U.S. dollar was last down 0.59% against the Japanese yen at 142.815,. The Taiwanese dollar pared gains following a record rally against the greenback amid market disquiet over Trump’s tariffs. The currency was last down 2.6% to 29.919 per dollar.
The euro extended gains after Merz secured the votes needed to become German chancellor following a humiliating and unprecedented defeat on the first attempt. The single currency was last up 0.28% to $1.134550.
Commerce Department data on Tuesday showed the U.S. trade deficit widened 14% to a record high of $140.5 billion in March as businesses boosted imports of goods ahead of Trump’s tariffs.
The Swiss franc weakened after Swiss National Bank Chairman Martin Schlegel said the SNB is ready to intervene in currency markets and cut interest rates even below zero to prevent inflation falling below its price stability target. The U.S. dollar was last up 0.35% against the Swiss franc at 0.82490.
Markets are focused on Wednesday’s Federal Reserve policy decision, where the U.S. central bank is expected to hold rates steady.
The Bank of England also meets this week and is expected to lower interest rates by a quarter point on Thursday.
Britain’s pound gained 0.49% to $1.33620.
Source: Reuters
