Unlock the editor’s summary for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
Investors attribute on the state of public finances in the United States caused the dollar to their greatest weekly fall since the announcement of the “release day” of President Donald Trump shook the markets in early April.
The US currency fell 0.9 percent on Friday against a pairs basket, including the euro and the Yen. The measure took its decrease in the week to 2 percent, the largest fall for six weeks, since Trump’s tax bill was added to concerns about increasing US debt levels. That has arisen when some investors question whether to reduce their enormous positions of overweight in dollars, about concerns about the formulation of erratic policies and the president’s trade war.
“Persistent fears on the quality of US assets markets. And the threat of disdirization continue to weigh on the dollar,” said Chris Turner, global market research head in ING.
He cited recent data indicated by the US assets.
That “seemed a clear reference to the great Asian commercial surpluses with the United States,” Turner said.
The United States Secretary of the United States, Scott Besent, sought on Friday to minimize investors’ concerns about the weakening of the dollar.
“I think that much of that is that other countries strengthen or other currencies strengthening, in opposition to the weakening of the dollar,” he said in a Bloomberg TV interview. A “fiscal expansion” in Europe was promoting the euro, Besent said, while the increases in interest rates of the Bank of Japan support Yen.
The bets that some Asian countries could make trade agreements with the US. UU. Which include measures to strengthen their change rates against backback have supported a series of currencies, including Korean profits and the Taiwanese dollar in recent weeks.
“The renewed concerns of investors on the Fiscal Perspective of the United States., Together with the speculation that the Trump administration is trying to weaken the dollar in discussions with other countries, they have contributed to mass sale,” said Lee Hardman, an analyst of Senior Banking Group Mufg.
Anxiety for investors that Trump’s tax reduction bill could worsen the American deficit has promoted a sale of long -term US debt this week, dragging other lower markets.
That has exceeded 30 -year treasure yield for 0.13 percentage points this week above 5 percent.
“The concern of investors for the US fiscal burden is being built slowly,” BBH analysts said.
The dollar has slipped this year as investors have worried about the impact of Trump’s radical tariffs on the US economy. That has included periods of fall at the same time as the bonds and actions of the United States government are decreasing, which has been taken as a sign of investors that yield active in dollars. In general, higher yields increase the attractiveness of dollars.
“The most worrying is how the dollar is reacting at high rates of the United States,” Michael Metcalfe, Macro Strategy Head in State Global Advisors, said.
“When the currencies and prices of the bonds move in the same direction, that reflects an aboller in the sustainability of the policies,” he added, saying that the rest in the usual correlations “makes you think that there is something more structural at stake.”
RBC Bluebay Asset Management analysts said they expected the weakening of the dollar to continue as investors seek to cover their exposure to short -term backback and rethink a “structural generalization” to the US in the long term.
Additional Steff Chávez reports
