Safe-haven Swiss franc at decade high, euro surges vs dollar as US-China trade war rages

Source: Reuters.

The losses followed the latest retaliation to US tariffs from Beijing, which said it would impose 125% duties on US goods from Saturday, up from the 84% previously announced.

That added to a global selloff which has battered stocks and even once safe-haven US Treasuries - 10-year yields are on course for their biggest weekly jump since 2001. [MKTS/GLOB]

"Before it was more like a dollar deleveraging; this is just a dollar crisis," said Francesco Pesole, FX strategist at ING.

"We need to get something from (US President Donald) Trump essentially ...it (the dollar) is clearly telling us that markets are very minded to sell America," he said.

Safe havens were among the standouts, with the dollar dipping to 0.81150 Swiss francs in early European trading, its lowest since January 2015, extending Thursday's nearly 4% plunge.

The Swiss National Bank said it had no comment on the franc's strengthening.

"The SNB is in a delicate situation, they probably would like to intervene more but it's very hard right now. I can't see them doing this on a larger scale," said Michael Pfister, FX analyst at Commerzbank.

He said the SNB wouldn't like the franc's appreciation because of its deflationary effect.

The dollar also tumbled as much as 1.4% against the Japanese yen to 142.37, and was last down 0.9%.

Trump expressed strong interest in Japan's currency policy in phone talks with Japanese Prime Minister Shigeru Ishiba on April 7, Kyodo news agency reported on Friday, citing a Japanese government source.

The euro surged 1.2% to $1.11305, earlier jumping as much as 2.5% to its highest in three years, with traders saying it was benefiting from high liquidity levels as investors look to sell dollars.

European Central Bank President Christine Lagarde on Friday said the central bank was ready to deploy its instruments to maintain financial stability and had a solid track record in devising new tools when required to deal with turbulence.

The euro also rose 0.5% against the pound in a sign of its outperformance, though the pound itself was up 0.7% against the dollar at $1.310.

"I'm deeply concerned about a lack of confidence among investors in the US now," said Nomura strategist Naka Matsuzawa. "It's a no confidence vote from not just the equity market but also Treasury market participants in the Trump administration and its policies."

US Treasury Secretary Scott Bessent said on Wednesday that a pullback in tariffs for most US trading partners had been the plan all along to bring countries to the bargaining table. Trump, though, later indicated that the near-panic in markets since his 2 April tariff announcements had factored into his thinking.

The dollar index, which measures the greenback against six main peers, sagged as much as 1.2%, taking it temporarily below the 100 level for the first time since July 2023.

China's yuan was also in focus after dropping to its weakest ever both onshore and offshore this week, though it has since rebounded. The dollar was last down 0.1% against the offshore yuan at 7.3155.

The People's Bank of China on Friday lifted its official yuan midpoint guidance fix for the first time in seven days, reflecting the broad weakness in the dollar.

China watchers have interpreted the central bank's actions as a signal it is open to gradual yuan weakening, but not a sharp move lower.