SINGAPORE – Monday, the dollar fell against major currencies and was trading near its lowest level in four months. This was because investors were worried about a global trade war, which made the yen and the Swiss franc look like safer investments.
Markets have been very focused on trade issues since U.S. President Donald Trump put tariffs on some of the U.S.’s biggest trading partners but then put them off for a month. This happened as fears of a slowdown in the U.S. economy grew.
Because of this, investors have lost faith in the U.S. economy, which has been doing better than its peers. People who trade in currency futures have cut their net long dollar holdings from a nine-year high of $35.2 billion in January to just $15.3 billion.
Instead of taking risks, investors have flocked to the Japanese yen and the Swiss franc, which have pushed both currencies to multi-month highs. The yen was 0.25% stronger on Monday, at 147.68 per dollar. It was just below its five-month high of 146.94, which it hit on Friday.
Monday, the Swiss franc hit a three-month high of 0.87665 per dollar. The euro stayed steady at $1.0842 after having its best week since 2009 last week, thanks to Germany’s game-changing budget reforms.
It compares the dollar to six other currencies. It was last at 103.83 on Monday, which is close to the four-month low it hit last week.
Last week, the dollar lost more than 3% of its value against major currencies. This was the worst weekly performance for the dollar since November 2022, as investors worry about tariffs and how they will affect the economy.
In an interview with Fox News on Sunday, Trump didn’t say whether he thought the U.S. would go into a recession because of his tariff moves on Mexico, Canada, and China. This made investors even more nervous.
Because of what Trump said, U.S. stock futures went down and benchmark 10-year U.S. Treasury yields dropped 3 basis points in Asian hours, which made the dollar weaker.
The idea that the dollar might not be able to get stronger or move quickly higher is strengthened by the fact that Trump wants to see the dollar weaken and yields fall. This was said by Parisha Saimbi, an Asia-Pacific rates and FX analyst at BNP Paribas in Singapore.
“FX investors are in a broad de-risking mode.”
Also on Friday, investors looked over data that showed U.S. job growth picked up in February. However, the once-strong job market is showing signs of weakness as a result of the confusing trade policy.
The Bureau of Labor Statistics of the Department of Labor said that nonfarm payrolls rose by 151,000 jobs last month. This came after rising by a corrected 125,000 jobs in January. Reuters asked economists and found that they thought payrolls would grow by 160,000 jobs. This was after it was reported that they had grown by 143,000 jobs in January.
Citi analysts said the data should make the Federal Reserve feel good about keeping rates unchanged at this month’s meeting. However, the jobs report shows that the labor market could weaken even more this spring, with the unemployment rate going up and the number of people working decreasing.
“The slowdown in consumer spending, upcoming government job loss and decline in equity prices will likely have the Fed cutting policy rates again in May,” a note said.
LSEG data showed that traders are taking 75 basis points of rate cuts from the Fed this year. In June, a rate cut is fully priced in.
In other currencies, the pound hit a four-month high of $1.2946 before falling to $1.2911 in the afternoon in Asia. The Australian dollar was worth $0.6315, which is 0.14% more than it was the day before. The New Zealand dollar was worth $0.5718.
In Asian hours, bitcoin almost fell below $80,000, but it slowly recovered and was last worth $82,297.82.
Monday, China’s yuan fell because of news that the consumer price index fell at the fastest rate in 13 months in February.
The onshore yuan was worth 7.2563 per dollar, which is 0.2% less than the overseas yuan, which was worth 0.24% less.
