Dollar Rally Resumes as Traders Brush Off Trump’s Tariff Threats
The dollar rose on Monday as currency traders shrugged off the latest threat of steep tariifs on China from US President Donald Trump and instead focused on the path for a possible trade deal between the world’s two largest economies.
The Bloomberg Dollar Spot Index gained some 0.2% as of 10:15 a.m. in New York. Meanwhile, the yen led Group-of-10 losses against the US currency and last traded around the 152.36 per dollar mark, while the euro extended losses below the closely-watched $1.16 level. Treasury futures were little changed with trading in the cash markets closed because of the US Columbus Day holiday.
Trump’s surprise Friday threat of a “massive increase” of tariffs on Chinese goods slammed the dollar and stocks in a move reminiscent of earlier this year, when White House trade policy announcements upended markets and dragged the dollar to its worst first-half in 50 years.
But Trump and Vice President JD Vance signaled openness to future trade negotiations in weekend remarks, and Treasury Secretary Scott Bessent said on Monday that he still expects Trump to meet Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation summit in South Korea later this month.
To be sure, the latest read of currency options positioning suggests that traders are bearish on the dollar in the short-term even as they remain more sanguine on its longer-term prospects. And Wall Street’s biggest names — including Goldman Sachs and JPMorgan — said in Oct. 10 research notes that they are sticking to their negative outlooks on the dollar.
In the absence of key data to drive markets as the federal government shutdown enters a 13th day, investors will scour corporate quarterly earnings results set to kick off this week for a read on the US economy.
The shutdown has paradoxically supported the greenback, strategists say, by limiting the extent to which traders can react to macro data — especially ahead of the Federal Reserve’s next policy decision later this month. Swaps traders are currently pricing a full quarter-point interest-rate cut from officials led by Jerome Powell on Oct. 29.
Source : Bloomberg.com
