Dollar Decline Amid U.S.-China Trade Stalemate

The dollar retreated as investor optimism faded regarding U.S.-China trade discussions. While initial hope followed Trump's softened stance, lack of progress led to renewed losses in the dollar. The yen and Swiss franc rose, while Bitcoin also dropped, reflecting ongoing volatility in the markets.

The dollar experienced a significant pullback on Thursday as investor optimism regarding the U.S.-China trade situation dwindled once again. Initial positive sentiment arose midweek after President Trump appeared to ease tensions by stepping back from threats against Federal Reserve Chair Jerome Powell and softening his stance towards China.

However, that optimism was short-lived. Treasury Secretary Scott Bessent confirmed that while the current trade embargo was unsustainable, the U.S. was not yet ready to reduce its steep tariffs on Chinese imports, which exceed 100%. China's Foreign Ministry stated that there were no new trade negotiations and called for the U.S. to lift its unilateral tariff measures.

With no clear progress, the yen rose, pushing the dollar down by 0.71%. Other currencies like the Swiss franc also gained strength against the dollar. Market expert David Morrison highlighted a 'two to tango' situation, where both nations are hesitant to make the first move. Despite minor rallies, the dollar is on track for one of its worst yearly starts in history, according to LSEG data. Meanwhile, correlated assets like Bitcoin followed suit, dropping 0.84%.

(With inputs from agencies.)