The U.S. dollar saw a decline today, falling against most major currencies due to concerns related to U.S. tariffs on China. Additionally, the United States’ decision to impose restrictions on chip exports to China and launch investigations into tariffs on critical minerals has negatively impacted market confidence, pushing the dollar back to levels not seen in weeks.
On the other hand, the Swiss franc benefited from this turmoil, recording its largest gains among the G10 currencies. The franc is considered a safe haven, with demand rising during times of crisis, which has led the Swiss National Bank to consider returning interest rates to negative territory. The euro also benefited from the dollar’s decline, gaining 5% since the tariff announcement, as European investors reduced their investments in U.S. assets.
As for the Japanese yen, it experienced strong financial flows due to speculation that Japan and the U.S. may reach an agreement supporting the Japanese currency. With increasing investments in the yen, markets have become more susceptible to sharp fluctuations if the talks between the two countries fail. Meanwhile, the Canadian dollar showed slight improvement against the U.S. dollar, amid ongoing concerns about U.S. economic policies and the possibility of a recession.
In the UK, the British pound maintained its strength despite data showing weaker-than-expected inflation, reaching its highest level in six months. In China, the yuan saw a slight decline against the dollar, amid concerns about the impact of tariffs on the Chinese economy, despite measures taken by the Chinese government to limit currency volatility.
Investors are also awaiting the results of the investigation into China’s holdings of U.S. Treasuries for February, with expectations that this data will reveal whether China has begun selling U.S. bonds as part of its response to the trade escalation. If bonds are sold, it could lead to increased pressure on the U.S. dollar and Treasury bonds.
In the U.S., speculation is growing about the possibility of the Federal Reserve adopting further monetary easing policies in light of falling inflation. It is expected that Federal Reserve Chairman Jerome Powell will adopt the same dovish tone as his colleague Christopher Waller, which could lead to additional pressure on the U.S. dollar.
Safe havens are certainly doing their job here, especially the Swiss franc, which is seeing impressive gains. It’ll be interesting to watch how sustainable these movements are if trade tensions remain elevated—especially with the euro also gaining ground amid the dollar’s weakness.