Currency Chaos: The Impact of Trump's Tariff Decisions

The U.S. dollar hovers near its lowest levels since 2021 against the euro and hits its weakest point versus the Swiss franc since 2015 on Monday. Traders remain vigilant as President Donald Trump's tariff deadline nears. Steeper duties are expected for most U.S. trade partners at the end of the 90-day moratorium on his 'Liberation Day' tariffs scheduled for Wednesday. Trump clarified on Sunday that the new rates would be effective from August 1.

The President mentioned his administration is close to finalizing multiple trade deals soon and will identify several countries on Monday that will receive letters detailing their new, elevated tariffs. Britain, China, and Vietnam have so far reached some form of trade agreement with the White House. According to a client note by James Kniveton, a Convera senior corporate FX dealer, 'Market volatility appears inevitable when the pause officially ends and new tariff levels are announced.' Kniveton added that the impact might be more muted this time as current proposals are expected, unlike previous announcements that exceeded expectations. Markets are seemingly pricing in further deadline extensions.

The dollar slipped 0.1% to 0.7944 against the Swiss franc in Asian trading, approaching the July 1 low of 0.7869 franc, a level unseen since January 2015. It edged slightly up to 144.73 yen. The euro eased by 0.1% to $1.1773, staying near the July 1 peak of $1.1829, its highest since September 2021. Sterling weakened by 0.2% to $1.3628 but remained close to its July 1 top at $1.3787, its strongest level since October 2021. The dollar index, which measures the currency against four rivals and two other major counterparts, added 0.1% to 97.058, hovering above Tuesday's nearly 3-1/2-year trough of 96.373.

(With inputs from agencies.)