Investors have been flocking to safe-haven currencies like the euro and Swiss franc as the dollar weakened to six-month lows against both, following US President Donald Trump’s announcement of tariffs that could impact global trade and economic growth. The highly anticipated tariff plan has sent shockwaves through markets, sinking global stocks and sending investors into the safety of bonds and gold.
Trump said he would impose a 10% baseline tariff on all imports to the US, along with higher duties on some of the country’s biggest trading partners. This move has raised concerns about a full-blown trade dispute that could trigger a sharp global economic slowdown and fuel inflation.
The dollar showed little reaction to weaker-than-expected data from the Institute for Supply Management (ISM), which indicated a nine-month low in the US services sector in March. However, investors are more concerned with the long-term implications of Trump’s plan and its potential impact on the global economy.
Safe-haven currencies have seen significant gains against the dollar. The euro hit a six-month high, while the Japanese yen and Swiss franc also surged. Britain’s pound has also benefited from the dollar’s weakness, rising 1.11% to $1.3155.
Deutsche Bank warned of the risk of a crisis of confidence in the US dollar, saying major shifts in capital flow allocations could take over from currency fundamentals. Investors are worried that retaliatory measures from US trading partners could lead to higher prices and inflation.
EU chief Ursula von der Leyen described the tariffs as a major blow to the world economy, while China’s onshore yuan slid to its weakest level against the dollar since mid-February. The Mexican peso and Canadian dollar have also strengthened due to the dollar’s weakness.
Source: https://www.cnbc.com/2025/04/02/dollar-steady-as-zero-hour-on-liberation-day-closes-in.html