Dollar, Lowest in 10 years against Swiss franc... Spread of Safe asset preference due to Trump tariff confusion
The US dollar is declining in unison against major currencies, including the Swiss franc, spreading anxiety in the foreign exchange market. On April 11 (local time), the dollar fell 1.2% against the Swiss franc at one point, recording 0.81405 francs, marking the lowest level since January 2015. This was a continuous decline following a nearly 4% plunge the previous day.
On the same day, the dollar fell 1.1% and 0.5% against the yen and the Canadian dollar, respectively. The euro rose 1.7% against the dollar, climbing to $1.13855, reaching the highest level since February 2022. The dollar index also fell 1.2%, falling below the 100 mark for the first time since July last year.
With the dollar's weakness standing out, gold prices rose to $3219.23 per ounce, setting a new record. Amid the surge in demand for safe assets, the movement of funds into gold, the euro, and the yen is accelerating.
The catalyst for this market anxiety is the change in tariff policy by Donald Trump, the US President. President Trump recently announced a 90-day suspension of high tariffs for some countries, excluding China, while maintaining a firm measure of an effective tax rate of 145% against China. It is pointed out that this directional confusion is escalating financial market anxiety.
Chris Weston, head of Pepperstone Research, analyzed that “Trump's tariff suspension is spreading as an interpretation of kind of system risk response, and investors are concerned about uncertainty.” He said, “As a result, the flow of return to traditional safe assets is prominent.”
Meanwhile, instability is also appearing in the US Treasury market. The 10-year Treasury yield once surged nearly 10 basis points to 4.488%, recording the largest weekly increase since 2001. Brent Donnelly of Spectra Markets evaluated, “The market is now in a clear dollar selling phase,” and “the traditional influence of the dollar is shaking.”
With the uncertain trade policy of the Trump administration continuing, the flow of global funds is expected to be centered around safe assets like gold for the time being.