Dollar Extends Slump as China Hits Back on Tariffs: Markets Wrap

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Dollar Extends Slump as China Hits Back on Tariffs: Markets today.

foreign exchange :: 1day ago :: source - bloomberg

By Robert Brand and Julien Ponthus

Image source: Pexels

(Bloomberg) -- The dollar extended losses after its biggest plunge in three years as China raised tariffs on all US goods, the latest salvo in the trade war that’s whipsawed markets this week.

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US stock futures and Europe’s Stoxx 600 equity benchmark turned lower. Havens such as the yen, Swiss franc and gold gained while the euro rose to its strongest in three years. The 10-year Treasury yield held above 4.4% after rising 50 basis points this week.

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China’s latest move came after President Donald Trump hiked US levies on the Asian nation even as he paused additional duties on some other trading partners. The greenback has become the latest victim of market turmoil as the trade war risks pushing the US into a recession. The haven status of Treasuries and the dollar’s position as a reserve currency are being questioned amid a broader exodus from US assets.

“The question of a potential dollar confidence crisis has now been definitively answered – we are experiencing one in full force,” ING Bank NV strategists including Francesco Pesole wrote in a note. “The dollar collapse is working as a barometer of ‘sell America’ at the moment.”

Investors will look for guidance later Friday from executives at some of the biggest US banks which are due to report first-quarter earnings, including Wells Fargo & Co., JPMorgan Chase & Co. and Morgan Stanley. BlackRock Inc. is also reporting before the US open.

The $7.5 trillion-a-day currency market has been on edge since Trump’s return to the White House and his on-again, off-again announcements on tariffs. The dollar gauge has lost more than 6% since its February peak and was down about 1.2% on Friday, on track for its biggest weekly decline since November 2022.

The worsening tariffs spat is already affecting corporations. Audi has suspended deliveries to the US and the bigger-than-expected import tax has also prompted Japan’s Nintendo Co. to delay pre-orders for its long-awaited Switch 2 gaming console. From Ray-Bans to wigs, US buyers may see unexpected price rises.

JPMorgan’s corporate clients are holding off on investment decisions because of uncertainty around tariff policies, according to Max Neukirchen, the bank’s co-head of global payments.

“The main player of global trade just tore down the play-book and we don’t know what his endgame is,” said Olivier Baduel, head of European equities at OFI Invest AM in Paris. “We’re witnessing a loss of visibility and we are still in a phase of uncertainty.”

An index of Asia-Pacific stocks was set for a third week of declines as market relief turned to angst after the White House clarified US tariffs on China rose to 145%. Shares in China and Hong Kong, however, rose on Friday on expectations the government will come out with more economic stimulus.

In commodities, oil is on track for a second weekly loss. Copper extended a rebound from its lowest close in 11 months. Aluminum, zinc and nickel all rose, while iron ore futures were little changed in Singapore.

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