Market Watch: The Currency Market is Sending an Alarming Signal to U.S. Investors and Consumers
Article by Joseph Adinolfi in Market Watch
Global stocks struggled on Tuesday as President Donald Trump’s latest batch of tariffs took effect, targeting Canada, Mexico and China. But even more troubling, according to some, was the reaction in the U.S. dollar.
In the past, when the U.S. has slapped tariffs on trading partners, the dollar has typically strengthened. Stephen Miran, Trump’s nominee to lead the president’s Council of Economic Advisers, said the tariffs imposed against China during Trump’s first term in office helped weaken the renminbi, China’s currency, which offset the impact of the new levies on consumer prices.
The dollar surged after the 2024 election, partly due to expectations tied to Trump’s tariff plans, even as many Wall Street figures cautioned that investors should take Trump “seriously but not literally” when it came to his tariff threats.
Now, according to some, the dollar’s weakness so far this week could be cause for alarm.
“The dollar going up on tariff news isn’t scary,” said Lily Francus, chief investment officer of Novi Loren and former quantitative strategy director at Moody’s, in a post from earlier this year that she shared again on X. “The day it goes down on tariff news will be.”
George Saravelos, global head of foreign-exchange research at Deutsche Bank, said there could be several reasons for the dollar’s reaction. But one stood out to him as particularly troubling: the possibility that the greenback could be losing its safe-haven status.
“There are times to be .....