NEW YORK : The U.S. dollar dropped across the board on Friday, as investors dumped the currency after U.S. President Donald Trump once again ratcheted up his trade war, recommending that the European Union be hit with 50 per cent tariffs beginning June 1.
That rekindled concern about the impact of duties on the world economy and global trade.
Trump said in comments on social media that the EU was “very difficult to deal with” and “our discussions with them are going nowhere.”
He threatened in a separate post to impose a 25 per cent tariff on Apple iPhones not made in the United States, as well as Samsung and other smartphone makers.
“The key theme that is weighing on the dollar right now is the loss of confidence in U.S. policy,” said Elias Haddad, senior markets strategist at Brown Brothers Harriman in London. “There’s an ongoing trade war and that’s leading countries to reassess their dependency on the U.S.”
In afternoon trading, the dollar sank 1 per cent versus the safe-haven Japanese yen to 142.48 after earlier falling to a two-week low. For the week, the greenback was down 2.2 per cent against the Japanese currency, on track for its largest weekly fall since April 7.
The euro rose 0.8 per cent against the dollar to $1.1363. Earlier in the session, it touched a two-week peak, and was on track for its biggest weekly rise in six weeks.
The dollar index, which measures the greenback against a basket of currencies, fell 0.8 per cent to 99.09, hitting a three-week trough.
For the week, the greenback was down 1.9 per cent, on track for its biggest weekly percentage decline since early April.
Treasury Secretary Scott Bessent noted that Trump’s tariff comments were in response to the EU’s pace on tariff talks, noting that the U.S. president does not believe the European Union’s trade offers to the United States are of sufficient quality.
U.S. stocks also fell in tandem with the dollar.
Jayati Bharadwaj, a global FX strategist at TD Securities, said the dollar and stocks selling off in unison highlighted the U.S. currency’s failure this year to act as a haven currency.
“The dollar’s correlation with equities is also broken … it’s flipped completely in the last few weeks and we expect it to stay that way. That’s because the risks that we’ve been dealing with since the start of the year are U.S.-centric,” she added.
The Japanese currency, meanwhile, got a boost earlier from data showing Japan’s core inflation accelerated at its fastest annual pace in more than two years in April, raising the odds of another interest rate hike by year-end from the Bank of Japan.
The data underscores the dilemma facing the Bank of Japan, which must grapple with price pressures from persistent food inflation as well as economic headwinds from Trump’s tariffs.
Super-long Japanese government bonds have also scaled record highs this week, although yields dipped on Friday.
After Moody’s last week downgraded the U.S. debt ratings, investor attention has focused on the country’s $36 trillion debt pile and Trump’s tax bill, which could add trillions of dollars more to it.
The bill narrowly passed the Republican-controlled U.S. House of Representatives and now heads to the Senate for what is likely to be weeks of debate, keeping investor sentiment fragile in the near term.
Sterling strengthened 0.9 per cent against the dollar to $1.3533 after earlier climbing to a more than three-year high. For the week, the pound was up 1 per cent, posting its largest weekly gain in five weeks.
Currency
bid
prices at
23 May
1948 GMT
Descripti RIC Last U.S. Pct YTD Pct High Low
on Close Change Bid Bid
Previous
Session
Dollar 99.128 99.908 -0.77 per cent -8.63 per cent 99.943 99.0
index 44
Euro/Doll 1.1357 1.1279 0.68 per cent 9.69 per cent $1.1375 $1.1
ar 28
Dollar/Ye 142.52 143.99 -1.03 per cent -9.44 per cent 143.965 142.
n 5
Euro/Yen 161.87 162.43 -0.34 per cent -0.83 per cent 162.75 161.
09
Dollar/Sw 0.821 0.8287 -0.92 per cent -9.52 per cent 0.8282 0.82
iss 05
Sterling/ 1.3527 1.3418 0.82 per cent 8.16 per cent $1.3539 $1.3
Dollar 42
Dollar/Ca 1.3725 1.3858 -0.93 per cent -4.53 per cent 1.3863 1.37
nadian 1
Aussie/Do 0.6493 0.6409 1.32 per cent 4.94 per cent $0.65 $0.6
llar 409
Euro/Swis 0.9322 0.9348 -0.28 per cent -0.76 per cent 0.938 0.92
s 94
Euro/Ster 0.8394 0.8404 -0.12 per cent 1.46 per cent 0.8418 0.83
ling 81
NZ 0.5984 0.5898 1.49 per cent 6.97 per cent $0.5989 0.58
Dollar/Do 97
llar
Dollar/No 10.0977 10.191 -0.92 per cent -11.16 per cent 10.2174 10.0
rway 863
Euro/Norw 11.4673 11.4992 -0.28 per cent -2.56 per cent 11.533 11.4
ay 634
Dollar/Sw 9.5244 9.6271 -1.07 per cent -13.55 per cent 9.6438 9.50
eden 42
Euro/Swed 10.8215 10.869 -0.44 per cent -5.63 per cent 10.8835 10.8
en 029
