The U.S. dollar stayed under pressure on Monday as investors grew hopeful that Washington would dial back its latest escalation in the U.S.–China trade war. The move followed Friday’s sharp sell-off, while political news from France and Japan weighed on the euro and yen.
The dollar index, which tracks the greenback against six major currencies, slipped 0.1% to 98.91. The decline came after a brief rebound that followed President Donald Trump’s surprise announcement of 100% tariffs on Chinese imports late last week.
Market Caution After Trump’s Tariff Comments
Friday’s tariff shock revived memories of Trump’s “Liberation Day” tariff rollout in April, which had rattled markets and triggered sell-offs in stocks and cryptocurrencies.
“It’s pretty nervous out there,” said Tim Kelleher, Head of Institutional FX Sales at Commonwealth Bank in Auckland. “It looks like Trump has softened his tone again,” he added, referring to a trading phrase suggesting that “Trump always chickens out.”
Trump appeared to calm investors over the weekend, writing on Truth Social: “Don’t worry about China, it will all be fine! President Xi just had a bad moment. The U.S.A. wants to help China, not hurt it.”
Currencies React Globally
Market activity was lighter than usual as the U.S. observed Columbus Day/Indigenous Peoples’ Day, with bond markets closed but stock exchanges still open. Japan’s markets were shut for Health and Sports Day.
The euro held steady at $1.1622 after France unveiled a new cabinet under Prime Minister Sebastien Lecornu, with Roland Lescure reappointed as finance minister.
Against the Japanese yen, the dollar rose 0.5% to ¥151.89 as investors watched developments in Japan’s ruling Liberal Democratic Party, where Sanae Takaichi faces fresh challenges following Komeito’s exit from the coalition.
Crypto and Commodities
Bitcoin traded at $114,849, down 0.2%, after Friday’s steep losses. Gold surged to a new record of $4,068 an ounce, up 1.2%, as investors sought safe-haven assets.
Meanwhile, the offshore yuan strengthened 0.2% to 7.1357 per dollar after data showed China’s export growth accelerated in September.
“What China does next will shape market reactions,” said Vasu Menon of OCBC Singapore. “Neither side wants to push tensions too far, especially after months of progress in trade talks. In the end, both Trump and Xi may choose economic stability over confrontation.”
Other Major Currencies
The Australian dollar rose 0.8% to $0.6525, while the New Zealand dollar gained 0.3% to $0.5735. The British pound (sterling) inched up 0.1% to $1.3347.
