The dollar is back under pressure following a series of ambiguous statements from the White House regarding ongoing trade negotiations between the U.S. and its partners. The USDIDX is down by approximately 0.5%, with capital primarily flowing into “safe havens” such as the yen, franc, and euro.
Falling confidence in the dollar is also fueling further gains in gold. Source: xStation5
China deal won’t be a quicky
Yesterday’s promise to normalize relations with China was quickly downplayed by the U.S. Treasury Secretary. According to Scott Bessent, reaching a full trade agreement could take 2–3 years, and the U.S. will not be making unilateral offers to China. As Donald Trump emphasized – the rest is up to Beijing.
Meanwhile, Xi Jinping declared today that China will work “with other partners” to restore order to international trade. Confusion deepened after a Chinese Ministry of Commerce spokesperson stated that “there are currently no negotiations taking place between China and the U.S.,” contradicting Trump’s recent comments.
Trump’s hot & cold on Powell
The new day also brought a third shift this week in Trump’s rhetoric toward Fed Chair Jerome Powell. On Tuesday, Powell was labeled a “major loser” by the President, potentially responsible for a U.S. economic slowdown. On Wednesday, Trump reassured markets he wasn’t planning to fire Powell, only to call the current rate level a “mistake” today.
Market anxiety over Trump’s stance on Powell appears to be greater than the ongoing trade policy chaos seen since early April. Against this backdrop, we’re seeing bullish gold, record stock volatility, and a sharp appreciation in “safe” currencies – the yen, franc, and euro. The dollar is now at its weakest since April 2022, and the sheer unpredictability of current U.S. economic policy may continue to push capital toward institutionally stable markets.
The dollar has been consistently weakening against major currencies since the start of the year. In March, the euro and franc joined the yen at the top of the performance rankings. Chart: cumulative YTD currency gains vs. USD. Source: XTB Research
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