The US dollar strengthened, defying the broader market selloff that was extended into its third consecutive day. The greenback has weakened considerably this year, falling more than 4%. But the buck is poised for a sizable comeback to kick off the trading week.
The US Dollar Index (DXY), a gauge of the greenback against a weighted basket of currencies like the Japanese yen and British pound, surged 0.42% to 103.46, from an opening of 103.07. The index is down 4.7% this year.
Financial markets were highly volatile on Monday as the leading benchmark averages seesawed between positive and negative territory.
China and “fake news” drove the April 7 session.
First, President Donald Trump announced that he would impose an additional 50% tariff on Chinese goods unless the country reversed its 34% retaliatory levy on US products entering the country. He gave them one day to make up their minds.
The president also ended all US-China trade negotiations, but he planned to begin trade talks with other countries immediately.
Trump said in a Truth Social post:
“Yesterday, China issued Retaliatory Tariffs of 34%, on top of their already record setting Tariffs, Non-Monetary Tariffs, Illegal Subsidization of companies, and massive long term Currency Manipulation, despite my warning that any country that Retaliates against the U.S. by issuing additional Tariffs, above and beyond their already existing long term Tariff abuse of our Nation, will be immediately met with new and substantially higher Tariffs, over and above those initially set. Therefore, if China does not withdraw its 34% increase above their already long term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th. Additionally, all talks with China concerning their requested meetings with us will be terminated! Negotiations with other countries, which have also requested meetings, will begin taking place immediately. Thank you for your attention to this matter!”
Second, stocks spiked after a report suggested that the president’s top economic advisor, Kevin Hassett, indicated that Trump was considering a 90-day tariff pause. The White House later clarified that this was “fake news.” US stocks tanked on the news.
Despite the volatility, the stock market benchmarks have pared their losses, particularly the broader S&P 500 and the tech-heavy Nasdaq Composite Index.
Other dollar-related assets have held steady, too. In fact, US Treasury yields have risen across the board, with the ten-year yield rocketing 17.5 basis points to 4.166%.
The USD/CAD currency pair fell 0.2% to 1.4199, from an opening of 1.4230, at 13:23 GMT on Monday. The EUR/USD tumbled 0.33% to 1.0925, from an opening of 1.0961.