Market Chaos: Dollar Dips Amid Trump's Tariff Reprisals

The dollar fell against both safe havens and risk-sensitive currencies after President Trump's striking tariff reprieve. The 90-day pause impacted various markets, with significant hikes on Chinese imports causing currency shifts. Traders are reevaluating positions due to fluctuating U.S. Treasury yields and trade policy changes.

President Donald Trump's unexpected tariff pause sent the dollar tumbling against both secure and risk-oriented currencies Thursday. The 90-day reprieve on his 'Liberation Day' levies led to turbulence across financial markets while maintaining a 10% tariff on most countries and increasing levies on Chinese imports to 125%, triggering a weaker dollar performance.

Market responses were immediate, with safe havens like the Swiss franc and Japanese yen weakening, and the Australian dollar, a barometer for global growth sentiment, strengthening. The shifting dynamics have prompted traders to adjust their positions in a generally dollar-negative trend, influenced by Treasury yield fluctuations.

Continuing uncertainties in trade policies have led to nervousness among investors. Despite Treasury yields being at historical highs, the dollar weakened further against the yen, euro, and pound. China's yuan saw movements amid speculation on its trade war strategy, contributing to the broader currency turbulence.

(With inputs from agencies.)