Dollar steadies as China-U.S. trade tensions in focus

The dollar index edged higher to 99.002, retracing some losses sustained after U.S. President Trump announced 100% tariffs on China

The U.S. dollar recovered from a selloff in early trade on Monday as investors hoped Washington may temper its latest escalation of the trade war with Beijing, while political developments in France and Japan undermined the euro and the yen.

The dollar index edged higher to 99.002, retracing some losses sustained after U.S. President Trump announced 100% tariffs on China.

That revived fears of Trump’s Liberation Day rollout of sweeping tariffs in April, sparking a selloff in stocks and cryptocurrencies on Friday.

Certainly, it’s pretty nervous out there, said Tim Kelleher, head of institutional FX Sales at Commonwealth Bank in Auckland.

If you look at the U.S. and China stuff, it looks like Trump has done a bit of a TACO again and softened his tone, he added, referring to a trading rule of thumb that “Trump always chickens out.”

Market liquidity may be affected by holidays as the U.S. observes Columbus Day/Indigenous Peoples’ Day today, while Japan is also closed to mark Health and Sports Day.

Against the yen, the dollar fetched 151.985 yen, up 0.5% as markets assessed the path ahead for new Liberal Democratic Party leader Sanae Takaichi.

The euro stood at $1.1609, down 0.1%, after the French presidency announced Prime Minister Sebastien Lecornu’s new cabinet line-up on Sunday, reappointing Roland Lescure, a close ally of Emmanuel Macron, as finance minister.

The offshore yuan traded at 7.137 yuan per dollar, tacking on 0.1% in early Asian trade. The Australian dollar fetched $0.6513, rising 0.6% in early trade, while the kiwi traded at $0.57345, up 0.3%. Sterling changed hands at $1.33415, up 0.1% so far on the day.

Cryptocurrency markets fluctuated between gains and losses after a sharp selloff on Friday, with bitcoin last trading up 0.4% at $115,486.04.