Trade War Turbulence: The Dollar Struggles Amid Conflicting Signals

The dollar remains volatile as uncertainty looms over the Sino-U.S. trade war de-escalation. Treasury Secretary Bessent insists that China should initiate negotiations, while conflicting signals persist. The dollar fell against the yen and Swiss franc, with investors concerned about chaotic U.S. tariff policies, despite some optimism on tariff reductions.

On Tuesday, the dollar struggled to regain its footing amid persisting uncertainty surrounding the de-escalation of the Sino-U.S. trade war. Investors were left in the dark after Treasury Secretary Scott Bessent suggested that the ball was in China's court to initiate negotiations.

In an interview on Monday, Bessent stated that it was up to China to reduce tariffs, contributing to the uncertainty fueled by mixed messages about trade talks between the two economic giants. Despite President Trump's claims of progress and discussions with Chinese President Xi Jinping, Beijing has publicly denied these statements.

This ambiguity further pressured the dollar, prompting a sharp decline against safe-haven currencies like the yen and Swiss franc. The situation was slightly alleviated by news that the Trump administration plans to adjust automotive tariffs. However, market analysts believe a resolution is unlikely in the short term, leaving the dollar vulnerable amid mixed U.S. trade and tariff strategies.

(With inputs from agencies.)