Dollar slides to decade-low vs Swiss franc as confidence dips in US assets

The dollar slumped on Friday as waning confidence in the US economy prompted investors to ditch US assets to the benefit of safe havens such as the Swiss franc, yen and euro, as well as gold.

The yellow metal recorded a new all-time peak, and the franc notched a fresh decade high.

Investors dumped Wall Street stocks overnight, as a powerful relief rally on Wednesday - when President Donald Trump abruptly paused higher tariff rates on dozens of trading partners - reversed course in a frenetic 24-hour period for markets. Longer-dated US Treasuries are also selling off, putting 10-year yields on course for their biggest weekly jump since 2001.

Trump's 90-day respite, which came despite his insistence for days that his policies would never change, didn't include China. Instead, he ratcheted up duties on Chinese imports to an effective 145 per cent rate, further escalating a high-stakes confrontation between the world's two largest economies.

The Chinese yuan had tumbled to an all-time low in offshore trading on Tuesday, but erased all those losses a day later, and surged again on Thursday. It initially strengthened in the latest session as well, before trading slightly weaker.

"There has been a pronounced 'sell US' vibe flowing through broad markets and into the classic safe-haven assets, with the $losing the safe-haven bid," said Chris Weston, head of research at Pepperstone.

"The moves (have) the feel of repatriation flows by foreign entities, with many re-focused on the idea that Trump's reluctant pause on tariffs was due to increased system risk, and migrating capital away from Ground Zero."

US Treasury Secretary Scott Bessent asserted on Wednesday that the tariff pullback had been the plan all along to bring countries to the bargaining table. Trump, though, later indicated that the near-panic in markets that had unfolded since his April 2 "Liberation Day" tariff announcements had factored into his thinking.

Since returning to the White House in January, Trump has repeatedly threatened an array of punitive measures on trading partners, only to revoke some of them at the last minute. The on-again, off-again approach has baffled world leaders and spooked business executives, who say the uncertainty has made it difficult to forecast market conditions.

The dollar dropped as much as 1.2 per cent to 0.81405 Swiss franc for the first time since January 2015, extending Thursday's nearly 4 per cent plunge.

The US currency slid 1.1 per cent to 142.88 yen, the weakest since September 30.

It also slumped 0.5 per cent to a five-month trough at C$1.3910.

The euro surged as much as 1.7 per cent to $1.13855, a level last seen in February 2022.

The dollar index, which measures the greenback against those four currencies and two more major counterparts, sagged as much as 1.2 per cent, taking it below the 100 level for the first time since July 2023.

The US currency drooped as much as 0.3 per cent to 7.2903 yuan in the offshore market in early trading, but was last up 0.1 per cent to 7.3211. In the previous two sessions, it slid 1.5 per cent.

Gold jumped 1.4 per cent to an unprecedented $3,219.23 per ounce.

Elsewhere, the benchmark 10-year Treasury yield climbed nearly 10 basis points early on Friday to 4.488 per cent.

"Trump blinked on higher yields, but that doesn't mean 10-year yields can't retest 4.50 per cent while the $sells off in tandem," said Brent Donnelly, president of Spectra Markets.

"I think we are entering a pure 'sell USD' regime," he said. "Rate differentials are losing their sway over the $for the first time in my life."