US dollar declines compared to Swiss franc and yen as trade tensions emerge again

Market Update: Trade Tensions Impact Currencies

NEW YORK/LONDON, Oct 14 – The U.S. dollar has slipped against safe-haven currencies like the Swiss franc and Japanese yen, which reflects fresh concerns over ongoing trade tensions between the U.S. and China. In contrast, the euro saw an uptick following the French government’s decision to halt a significant pension reform.

The dollar decreased by 0.14% to 0.803 francs and by 0.13% to 152.08 yen, after having gained against these currencies recently.

“Yesterday’s market was somewhat sluggish,” remarked Mark Chandler, the chief market strategist at Bannockburn Capital Markets. “There was some hope that U.S.-China trade tensions might be easing, but it’s clear that’s not the case.” This comment aligns with the recent developments.

On Tuesday, both nations initiated additional port fees for shipping firms handling a range of goods from holiday toys to crude oil.

Moreover, China has declared it is enacting countermeasures against five U.S.-linked subsidiaries of Hanwha Ocean, a South Korean shipbuilding company. They are also investigating the implications of the U.S. Section 301 investigation on their domestic shipping sector.

This retaliation seems to undermine the conciliatory tone previously expressed by U.S. President Donald Trump over the weekend, which had generated some optimism earlier this week.

In France, Prime Minister Sébastien Lecornu has decided to delay the landmark pension reform initially slated for 2023 until after the 2027 presidential elections. This decision came under pressure from leftist lawmakers aiming to assure their political future.

Following this announcement, the euro strengthened against the dollar, rising by 0.16% to $1.1587. Chandler noted, “There doesn’t appear to be as much austerity as in the previous government. French government bonds are performing well, the best in the euro area.”

Meanwhile, the British pound fell by 0.30% against the dollar, now at $1.32955, due to data indicating a slowdown in wage growth and an uptick in unemployment claims.

The pound also weakened against the euro, which gained 0.37% to 87.18 pence.

In other currency news, the Australian dollar, often seen as a barometer for Chinese economic sentiment due to close ties, dipped 0.52% to $0.64820—its lowest in about two months. Similarly, the New Zealand dollar dropped by 0.26% to $0.571.