The U.S. dollar continued its decline on Wednesday, falling broadly against major currencies as fresh concerns over U.S. tariff actions rattled markets.
The Swiss franc and the euro led the charge, with the franc rising 0.7% to 0.8175, approaching its 10-year high set last Friday. The dollar also weakened by 0.4% against the Japanese yen, trading at 142.69, after briefly hitting a seven-month low during the session.
The latest wave of selling was triggered by the U.S. government’s decision to impose tighter restrictions on chip exports to China, as well as President Donald Trump’s announcement of a new investigation into potential tariffs on critical minerals. These moves have added further uncertainty to a market already burdened by unpredictable tariff threats and reversals over the past few weeks.
The Swiss franc’s performance has been particularly striking, outpacing all other G10 currencies since the initial tariff announcements on April 2. The currency’s rise, driven by its safe-haven appeal and growing interest in European assets, has fueled speculation that the Swiss National Bank may take action. However, concerns over potential U.S. retaliation may limit any direct intervention by Swiss authorities.
Meanwhile, the euro continued its upward momentum, gaining 0.7% to $1.1356. The euro has appreciated about 5% since tariff tensions began, as European investors reduced their exposure to U.S. assets. While the euro faced slight pullbacks earlier this week, it remains near its three-year high of $1.1474.
In Japan, currency traders are closely watching talks between Japan’s economy minister, Ryosei Akazawa, and U.S. Treasury Secretary Scott Bessent, amid speculation that the two may reach an agreement on policies that could strengthen the yen. The market remains sensitive to any signs that these discussions may falter, given the significant buildup of yen positions.
Other currencies also made gains against the dollar. The Canadian dollar rose 0.3% to C$1.3916, marking a 4% increase in April. The loonie’s strength reflects concerns about U.S. economic instability and erratic policy shifts. Markets are also uncertain about the Bank of Canada’s upcoming policy decision, with a 40% chance of a rate cut priced in.
The British pound increased 0.28% to $1.327, shrugging off weaker-than-expected inflation data and reaching a six-month high of $1.3292 earlier in the session. In the Asia-Pacific region, the Australian and New Zealand dollars held strong, with the Aussie at $0.637 and the kiwi at $0.5913, maintaining their strongest weekly performance since 2020.
In China, the yuan remained relatively stable. The onshore yuan traded at 7.3064 per dollar, while the offshore rate improved by 0.29% to 7.3080. Despite strong economic data for the first quarter, markets showed limited immediate reaction. Chinese authorities have allowed only slight adjustments to the yuan’s trading band, even as tariffs on Chinese exports have surged to over 100%.
