Dollars and De-risking: Global Trade Tensions Rattle Investors

The dollar weakened against major currencies due to global trade war concerns. Investors shifted towards safer currencies like the yen and Swiss franc as U.S. tariffs and a potential economic slowdown shook confidence. President Trump's comments further impacted the dollar alongside fluctuating stock and Treasury markets.

The dollar slumped on Monday, nearing its lowest level in four months against major currencies, as a potential global trade war raised investor concerns. Safe-haven assets like the yen and Swiss franc gained momentum. Investors are spooked by trade tensions as President Trump's tariffs hit top trading partners, hinting at economic slowdowns.

This has diminished investor confidence in the U.S. economy, which had previously outperformed. Currency futures reveal a drastic cut in net long dollar positions, while risk-averse investors lean towards the yen and franc. On Monday, the yen strengthened slightly, continuing its upward trend from last week. The Swiss franc also reached new highs.

Elsewhere, the euro remained stable after recent performance boosts from Germany's fiscal reforms. Meanwhile, Trump's reluctance to comment on a potential recession fueled more market insecurities. Concerns over tariffs led to lower U.S. stock futures and Treasury yields, contributing to the dollar's decline.

(With inputs from agencies.)