Dollar weakens against peers on trade disputes, China’s offshore yuan hits record low

NEW YORK/LONDON: The US dollar weakened against major currencies including the yen and euro, while China’s offshore yuan hit a record low on Tuesday, amid trade disputes sparked by President Donald Trump’s sweeping tariffs that have roiled markets for three days.

The Japanese yen and Swiss franc continued to benefit from appetite for safe-havens, however, as investors remain concerned about the potential for a global recession.

Markets are bracing for a war of attrition between the US and China.

Beijing has refused to bow to what it called “blackmail” and vowed to “fight to the end” after Trump threatened to ratchet up tariffs to 104 per cent in response to China’s decision to match “reciprocal” duties Trump announced last week.

Trump said on Tuesday that he is waiting to hear from China before duties take effect.

China’s offshore yuan hit its lowest level since it started trading in 2010 at 7.3815.

The dollar weakened 0.53 per cent to 147.06 yen against the Japanese yen and was down 0.33 per cent to 0.857 franc against the Swiss franc.

On Tuesday, the euro was last up 0.1 per cent at $1.091375, down from an earlier rise of more than 0.7 per cent, after falling for the two previous days.

Marvin Loh, senior global market strategist at State Street in Boston, said the dollar’s underperformance against its peers has been partly driven by recession worries in face of tariffs.

Currencies that often fare well when stock markets are rising also recovered, with the pound up 0.37 per cent and the Australian dollar 0.58 per cent higher after both dropped in the previous two sessions.

Investors on Tuesday gleaned some positive signs from the Trump administration about tariff talks.

Treasury Secretary Scott Bessent said on Monday he hoped negotiations would bring levies down.

Trump said Japan was sending a team to start negotiations, helping Japanese equities rally sharply overnight.

On Wall Street, all three main indexes were trading higher after falling sharply last week following Trump’s tariff announcement.

“When you kind of look at it over the course of the last week, the dollar and Treasury yields haven’t really responded as aggressively as you would think given how the move on the equity side of things has been,” Loh added.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.11 per cent to 103.32.

The index has fallen around 0.7 per cent since Trump announced the tariffs on April 2, as investors have weighed up the hit to the US economy against the currency’s typical role as a shield from market slumps.

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