The Bloomberg Dollar Spot Index fell as much as 0.8% on Friday, extending a more-than-7% decline since the beginning of the year. The dollar is down for a fourth day in five after Trump’s latest threats of tariffs, on the European Union and Apple Inc., added to investor concern about the impact of his trade policies on the world’s top economy.
Meanwhile, hedge funds, asset managers and other speculative traders continued to bet against the dollar, according to the Commodity Futures Trading Commission.
A “large increase in tariffs on US imports from the EU once again brings forward the potential for recession risks in the US alongside higher policy and economic uncertainty,” said Aroop Chatterjee, a strategist at Wells Fargo in New York.
The dollar’s declines offered support for all of its Group-of-10 currency peers. Seven currencies out of the group rose 1% or more against the greenback during Friday’s trading, with New Zealand and Australian dollars leading advances. The Canadian loonie strengthened to as much as 1.3709 per US currency, its strongest level since October.
The losses on Friday continued even after Treasury Secretary Scott Bessent said on Bloomberg Television’s Wall Street Week with David Westin that the US could strike several large trade deals in the next couple of weeks.
He also said that he wouldn’t necessarily call the dollar weak, adding that the recent moves in foreign-exchange have been driven more by other currencies appreciating rather than the greenback softening.
“Bessent’s commentary this morning didn’t do dollar any favors and likely inserted further speculation into the market that this administration is pursuing a weaker-dollar policy,” said Monex foreign-exchange trader Helen Given.
Dollar ‘Jitters’
Enthusiasm has been fading for the world’s reserve currency this year. Speculative traders remained bearish on the dollar but trimmed their positioning to $12.4 billion in the week ending May 20 from $16.5 billion in a week prior, according to CFTC data reported Friday.
Some of the angst has come as the Senate considers Trump’s tax bill, which includes a debt ceiling increase the Treasury needs to avoid a default that could happen as soon as August or September.
The version of the bill passed by the House of Representatives is expected to add hundreds of billions of dollars to the federal deficit each year.
“The jitters with respect to the US budget suggest that the market is continuing to re-think the US exceptionalism trade,” Jane Foley, a strategist in London for Rabobank. “Whether it be budget, inflation or growth concerns, investors are more wary of US assets and that is continuing to weigh on the dollar.”
Source: bloomberg.com
