SINGAPORE: The dollar was steady on Tuesday but stayed close to the three-year low against the euro and a six-month trough against the yen it hit last week as investors struggled to make sense of the back-and-forth changes on U.S. tariffs.
Still, currency markets were a lot calmer in early Asian hours after last week’s turmoil that badly bruised the dollar despite a surge in Treasury yields, highlighting the shaky investor confidence in the greenback and U.S. assets.
The dollar was 0.27% higher at 143.53 yen but remained close to the six month low of 142.05 it touched on Friday. The euro eased 0.22% to $1.1324 just below the three-year high of $1.1474 hit last week.
After slumping to a ten-year low against the Swiss franc last week, the dollar was 0.3% higher in Asian hours. The dollar is down nearly 8% against the Swiss franc this month, set for its biggest monthly drop since December 2008.
Market focus has been on the ever-shifting tariff headlines with the U.S. removing smartphones and other electronics from its duties on China over the weekend providing some relief, although comments from President Donald Trump suggested the reprieve is likely to be for a short time.
Trump’s imposition and then abrupt postponement of tariffs on goods imported to the U.S. has sowed confusion, adding to the uncertainty for investors and policymakers around the world.
Kieran Williams, head of Asia FX at InTouch Capital Markets, said the policy confusion and erosion in investor confidence are fuelling a slow but steady rotation out of dollar assets.
“The recent backpedaling on U.S. tariffs has eased some of the acute market anxiety, softening the dollar’s safe-haven appeal in the near term.”
The yield on the benchmark U.S. 10-year Treasury note was steady at 4.354% after dropping nearly 13 basis points in the previous session.
The yields had risen about 50 basis points last week in the biggest weekly gain in over two decades as analysts and investors questioned the bonds’ status as the world’s safest asset.
