Dollar Stumbles as U.S.-China Trade Standoff Intensifies

By Rae Wee

SINGAPORE (Romero.my.id) – The dollar managed only minor gains after experiencing significant declines on Tuesday. Investors remained uncertain about whether a reduction in tensions between China and the U.S. over their trade dispute had begun, following comments from Treasury Secretary Janet Yellen indicating that the responsibility lay with China to initiate talks.

In an interview on Monday, Bessent stated that it was China’s responsibility to reduce tensions regarding tariffs—the most recent example of mixed messages about the advancement of trade discussions between the globe's two biggest economic powers.

Although Trump claims significant headway has been made and that he has communicated with Chinese leader Xi Jinping, China refutes these claims.

The misunderstanding only provided investors with further incentive to offload the dollar, causing it to plummet significantly against the safe-haven currencies—the Japanese yen and the Swiss franc—in the preceding trading session.

The US dollar climbed 0.11% to trade at 142.19 yen, nearly recovering from its previous 1.2% drop, and gained 0.18% versus the Swiss franc to reach 0.8217, after decreasing by 0.8% on Monday.

The sentiment improved somewhat due to reports indicating that U.S. President Donald Trump’s administration plans to lessen the effect of his auto tariffs on Tuesday.

Considering the mixed messages, I believe a pact is highly improbable in the short term, and China could be gearing up for an extended trade conflict,” stated Carol Kong, a currency analyst from the Commonwealth Bank of Australia (CBA).

In general, the U.S. tariff policy is quite disorganized, which clearly makes markets uneasy; however, there is a rising sense of hope that the peak turmoil from the trade conflict might be behind us now.

Even though scant evidence indicates advancement in trade talks between the United States and China, both parties recently appeared to ease their positions. The Trump administration showed willingness towards decreasing tariff rates, whereas China decided to waive additional charges for certain American goods imported into the country.

The euro decreased by 0.15%, trading at $1.1404, yet it continued to be poised for its biggest monthly increase against the dollar in roughly 15 years. This occurred as investors moved away from U.S. assets and sought out different options within Europe.

Sterling was close to hitting a peak from the past three years and had been purchased most recently at $1.3427. The dollar maintained stability against various global currencies, trading at 99.079, after experiencing a decline of 0.6% during the prior day’s session.

Investors were preparing themselves for a busy week of U.S. economic information, which could offer initial signs of whether President Trump’s trade conflict is having an impact.

The employment report scheduled for Friday will be crucial for market trends, as initial GDP growth estimates for the first quarter and core PCE numbers—the preferred measure of inflation by the Federal Reserve—are set to release prior to this.

CBA's Kong stated, 'I believe U.S. economic data will certainly worsen even more from this point.'

When weaker economic figures are released, I believe they will put additional pressure on the U.S. dollar, since currently, investors view the U.S. dollar as a less dependable safe-haven asset. Actually, I feel it’s behaving more akin to a risky currency.

In Canada, the loonie remained largely unchanged at C$1.3837, as investors awaited the results of Monday’s general election where Trump's tariffs and comments about potentially annexing Canada emerged as key topics.

The Australian dollar decreased by 0.02% to reach $0.6431, whereas the New Zealand dollar dropped by 0.27% to stand at $0.59635.

(Reported by Rae Wee; Edited by Shri Navaratnam)