NEW YORK/LONDON- The dollar continued to slide against major currencies on Friday as the back-and-forth over import tariffs shook investor confidence in the safety of the greenback, sending it to its lowest level in a decade against the Swiss franc and a three-year low versus the euro.
China increased its tariffs on US imports to 125 percent from 84 percent on Friday, retaliating against US President Donald Trump’s decision to hike duties on Chinese goods to a total of 145 percent after pausing many of his latest tariff hikes on most countries.
The dollar has been hit hard by a global selloff that spread to stocks and even safe-haven US Treasuries. The yields on benchmark 10-year notes are on course for their biggest weekly jump since 2001.
Brad Bechtel, global head of FX at Jefferies, said dollar weakness is being driven partly by the view that US economic exceptionalism is waning – with the potential of a looming recession – and a switch from the dollar as a safe-haven asset to the yen and Swiss franc.
“There’s a great rotation, which is basically foreign investors diversifying away from the US into other regions such as the euro zone. And for those foreign investors still involved in the US, they’re realizing they need to currency hedge their assets. There’s a scramble to do so, which is putting additional pressure on the dollar.”
Data on Friday showed US consumer sentiment deteriorated sharply in April while 12-month inflation expectations surged to the highest level since 1981 amid unease over the trade tensions.
On Wall Street, the benchmark S&P 500, Dow Jones Industrial Average and the Nasdaq Composite indices edged higher after losing ground earlier in the session. They were set to end higher in a week marked by topsy-turvy developments in the global trade war.
