Dollar Tumbles As Investors Flee To Safe Havens

The U.S. dollar suffered a sharp decline on Friday as investor confidence in the American economy continued to falter, driving capital away from U.S. assets and into traditional safe havens such as the Swiss franc, Japanese yen, euro, and gold.

Gold soared to a record high, while the Swiss franc reached its strongest level in a decade. The dollar’s fall came on the heels of a dramatic reversal in investor sentiment, sparked by President Donald Trump’s unexpected decision to pause certain tariff hikes—excluding China—after days of insisting there would be no policy changes.

The market’s initial relief, marked by a strong rally on Wednesday, swiftly evaporated within 24 hours. U.S. equities plunged, and longer-dated Treasury bonds were heavily sold, sending 10-year yields toward their largest weekly surge since 2001.

Trump’s 90-day suspension of new tariffs on multiple trade partners did little to reassure markets, particularly as the exemption did not extend to China. Instead, the administration intensified its trade offensive, raising the effective tariff rate on Chinese imports to 145%, further escalating tensions between the world’s two largest economies.

The Chinese yuan, which had dropped to a record low in offshore trading earlier in the week, rebounded sharply before weakening slightly again on Friday. The People’s Bank of China responded by raising its official yuan midpoint for the first time in a week, a move analysts see as a signal that Beijing may allow a gradual weakening of the currency while resisting a dramatic devaluation.

Nomura strategist Naka Matsuzawa described the market reaction as a “no confidence vote” in both U.S. economic leadership and the Trump administration’s unpredictable policy stance.

“It’s not just the equity market,” Matsuzawa said. “Even Treasury investors are expressing deep concern.”

Despite Treasury Secretary Scott Bessent’s assertion that the tariff rollback had always been a strategic move to draw countries into negotiations, Trump later suggested market turmoil following his April 2 “Liberation Day” announcement had influenced his shift in tone.

Since resuming office in January, Trump has frequently issued and then retracted punitive trade threats, creating widespread uncertainty among international leaders and corporate executives. Critics say the volatility is undermining global economic stability and complicating financial planning for businesses.

The greenback’s losses were broad and deep. It fell as much as 1.2% to 0.81405 Swiss franc—the lowest since January 2015—extending a nearly 4% plunge from the previous session. Against the yen, the dollar slid 1.1% to 142.88, its weakest point since September 30. The euro gained 1.7%, hitting $1.13855, a level last seen in February 2022.

The U.S. Dollar Index, which tracks the currency against six major peers, dropped as much as 1.2%, temporarily falling below the key psychological level of 100 for the first time since July 2023.

In the offshore yuan market, the dollar briefly fell 0.3% to 7.2903 before recovering slightly to 7.3232, though it remains down 1.5% over the last two sessions.

Gold spiked 1.5% to an all-time high of $3,219.84 per ounce, as nervous investors sought shelter from currency and equity volatility.

Meanwhile, the benchmark 10-year Treasury yield rose nearly 10 basis points in early Friday trading, reaching 4.488%, reflecting the broad sell-off in bonds.

Brent Donnelly, president of Spectra Markets, warned that Trump’s policy shift might have come too late to restore market faith.

“Trump blinked on higher yields, but that doesn’t mean we won’t see 10-year yields retest 4.50% while the dollar sells off in tandem,” Donnelly said. “We’re entering a pure ‘sell USD’ regime. For the first time in my life, rate differentials are no longer steering the dollar’s direction.”

The latest developments underscore mounting anxiety over U.S. policy unpredictability and economic trajectory, adding fresh volatility to global markets already on edge.