Dollar declines for fifth straight day as market eyes trade tensions
NNA - The U.S. dollar weakened for a fifth consecutive session, as traders shrugged off a temporary delay in certain electronic tariffs and reacted to President Donald Trump's downplaying of exemptions for the technology sector.
The Bloomberg Dollar Spot Index was down 0.2% after tumbling to its lowest since October in early Asian trading. The gauge has slumped almost 6% this year amid escalating trade tensions with China, uncertainty over US policy and concern economic growth will slow, News.Az reports, citing Bloomberg.
The dollar's decline resumed after Trump said on Sunday he will still apply tariffs to phones, computers and popular consumer electronics, downplaying an earlier reprieve as a procedural step in his efforts to overhaul US trade. 'NOBODY is getting 'off the hook,'' the president said in a social media post as trading began in Asia.
Almost 80% of respondents to a Bloomberg survey predicted the dollar would weaken further over the next month, the biggest proportion of bears since the surveys began in 2022. A gauge of greenback volatility remains close to a two-year high, while speculative traders added to short positions in the US currency in the week though April 8, data from the Commodity Futures Trading Commission show.
Federal Reserve Bank of Minneapolis President Neel Kashkari on Sunday downplayed expectations the central bank would step in to support financial markets after his Boston counterpart Susan Collins suggested that was a possibility. 'Investors in the US and around the world are trying to determine what is the new normal in America' and the Fed has 'zero ability to affect that,' Kashkari said.
Strategists at the biggest Wall Street banks see the potential for further weakness in the dollar as the impact of Trump's tariff implementation works its way through the economy and markets.
JPMorgan Chase & Co. analysts suggested investors remain bearish the dollar, especially against the yen and euro, as there's still a meaningful chance of a US recession. Mizuho Bank Ltd. anticipates the dollar may fall another 5% on a trade-weighted basis before rebounding, based on what happened in 2017-18 and the pandemic.
Demand for hedging against potential dollar declines has jumped to a five-year high as the Trump administration's tariff policy threatens to sap US economic exceptionalism.
An index measuring three-month risk reversals — or the spread between call and put options — on the dollar against 12 of its major peers has dropped to the lowest level since the depth of the global pandemic in March 2020, according to data compiled by Bloomberg.--agencies
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