Dollar Rises Alongside Treasury Yields as Trump Faces Tariff Setback
The dollar gauge rose to its highest in a week as investors reacted to news that President Donald Trump’s global tariffs were deemed illegal by a U.S. trade court. U.S. Treasury bonds fell.
The greenback gained as much as 0.4% in early Asian trading on Thursday, after the U.S. Court of International Trade in Manhattan ruled that Trump had wrongly invoked emergency legislation to justify the levies. The White House said it would appeal the ruling.
“There’s a knee-jerk reaction in the market that we might be going back to a pre-tariff world, at least that’s the theory,” said Mingze Wu, a currency trader at StoneX Financial Pte Ltd in Singapore. “The dollar has been sold off heavily because of the tariffs so it makes sense that we see the opposite now as the trade outlook becomes more positive.”
The dollar has fallen more than 7% since its February high as the trade war has badly dented sentiment on U.S. assets and prompted a rethink about the world’s reliance on the greenback. The court ruling was one of the biggest setbacks for Trump, and may ease some market jitters for now about how much U.S. tariffs could alter global trade and growth. The yield on the 10-year U.S. Treasury rose four basis points.
The yield on the two-year Treasury rose five basis points to 4.04%. The yen and Swiss franc led losses against the dollar among major currencies as the news boosted risk sentiment and cooled demand for safe-haven assets. “There are tariffs now, and there’s room for more after July 9,” said Stephen Spratt, a strategist at Societe Generale in Hong Kong. “It raises the odds of no tariffs, but it’s very hard to know how much that has changed.”
Source: Bloomberg
