Dollar Slumps As Trump’s Tariff Moves Shake Markets: Gold And Safe Havens Surge

Dollar falls

The U.S. dollar fell sharply on Friday as investors lost faith in the U.S. economy. They sold off U.S. stocks and bonds, turning instead to safer options like the Swiss franc, Japanese yen, euro, and gold. Gold hit a new record high, and the Swiss franc reached its highest level in a decade.

On Wednesday, President Donald Trump unexpectedly delayed higher tariffs on many trading partners, sparking a brief stock market rally. But that optimism faded quickly, and stocks dropped again within 24 hours. U.S. government bonds, particularly 10-year Treasuries, also sold off, pushing their yields to the biggest weekly jump since 2001.

Trump’s tariff pause didn’t apply to China, where he raised duties on imports to a steep 145%, worsening tensions between the U.S. and China. The Chinese yuan, which hit an all-time low earlier in the week, bounced back strongly but weakened slightly on Friday.

Nomura strategist Naka Matsuzawa said investors are losing confidence in the U.S., not just in stocks but also in bonds, due to Trump’s unpredictable policies. Treasury Secretary Scott Bessent claimed the tariff delay was always part of the plan to negotiate with other countries, but Trump admitted market panic since his April 2 tariff announcements influenced his decision.

Trump’s habit of threatening tough trade measures and then pulling back has confused world leaders and businesses, making it hard for them to plan.

The dollar dropped significantly:
– 1.2% against the Swiss franc, hitting its lowest since January 2015.
– 1.1% against the yen, the weakest since late September.
– The euro jumped 1.7%, reaching its highest since February 2022.

A broader measure of the dollar against six major currencies fell 1.2%, dipping below 100 for the first time since July 2023. Against the Chinese yuan, the dollar was slightly up after earlier losses.

China’s central bank raised its yuan guidance on Friday, signaling it might allow the yuan to weaken gradually but not too sharply. Gold surged 1.5% to a new high of $3,219.84 per ounce, and 10-year Treasury yields rose to 4.488%.

Brent Donnelly from Spectra Markets said Trump’s pause on tariffs hasn’t stopped bond yields from climbing, and he believes the dollar will keep falling as its usual drivers, like interest rates, lose influence.

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