By Saqib Iqbal Ahmed
(Reuters) – The U.S. dollar fell across the board on Monday, giving up the previous week’s gains, as markets weighed the outlook for President Donald Trump’s tariff policy and its potential to hurt growth and stoke inflation.
The U.S. currency slipped after Trump said on Friday he planned to double duties on imported steel and aluminum to 50% starting on Wednesday, and as Beijing hit back against accusations it violated an agreement on critical minerals shipments.
China’s Commerce Ministry said on Monday the charges were “groundless,” and promised to take unspecified forceful measures to safeguard its interests. Treasury Secretary Scott Bessent said on Sunday Trump and Chinese President Xi Jinping were likely to have a call soon, and “this will be ironed out.”
Michael Brown, market analyst at online broker Pepperstone in London, noted the selling pressure on the dollar was broad-based.
“Any time we see a resurgence in tariff concerns, everyone begins to pile back into the ‘sell America’ trade once more,” Brown said.
The dollar dropped 0.8% to 142.85 yen, nearly wiping out its gain against the Japanese currency last week.
The euro rose 0.8% to $1.14355 – its highest since late April. Later in the week, the focus will be on the European Central Bank’s interest rate decision and subsequent outlook.
The dollar extended its losses after data showed U.S. manufacturing contracted for a third straight month in May and suppliers took longer to deliver inputs amid tariffs, potentially signalling shortages of some goods.
Earlier in the session, data showed European manufacturing took another step towards stabilisation in May, but Asian factory activity declined.
The dollar index, which measures its performance against six other major currencies, eased 0.6% and at 98.75 was just shy of the three-year low of 97.923 touched in late April.
The U.S. currency has been whipsawed for weeks by Trump’s on-again-off-again trade war, and investors have been questioning the currency’s safe-haven status as a flare-up in tensions stokes worries of a potential U.S. recession.
“We expect USD to continue to weaken (over the next 12 months) thanks to a convergence in both U.S. rates and growth to peers,” Morgan Stanley strategists said in a note on Sunday.
Last week, the dollar got some respite, rising 0.3% after trade talks with the European Union got back on track and a U.S. trade court blocked the bulk of Trump’s tariffs on the grounds that he overstepped his authority.
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