By Rae Wee
SINGAPORE (Reuters) -The dollar drifted lower on Monday after an early bump off a three-year low, as investor confidence in the world’s reserve currency remained in question following a stream of tariff-related pronouncements from U.S. President Donald Trump.
Investors braced for another volatile week as Trump’s imposition and then abrupt postponement of tariffs on goods imported to the U.S. continued to sow confusion.
The dollar reversed early gains as the Asian trading session got under way, languishing near a 10-year low against the Swiss franc at 0.8188.
Sterling held to most of its 1.7% gain from last week and stood at $1.3099, while the New Zealand dollar rose to a four-month high of $0.5860.
Trump on Sunday said he would announce the tariff rate on imported semiconductors over the next week, adding that there would be flexibility towards some companies in the sector.
The White House on Friday had granted an exclusion from steep tariffs for smartphones, computers and certain other electronics imported largely from China. Trump later said the move would be short-lived.
“At this point in time … it’s been handled haphazardly, heavy-handedly and with weight, and those measures have created a great deal of uncertainty,” said IG market analyst Tony Sycamore.
“Those storm clouds, they’re still circling, they haven’t gone anywhere.”
Against the yen, the dollar fell 0.22% to 143.24.
Japan is gearing up for trade negotiations with the United States that will likely touch on the thorny topic of currency policy, with some officials privately bracing for Washington to call on Tokyo to prop up the yen.
Japanese Economy Minister Ryosei Akazawa said on Monday that foreign exchange issues would be dealt with between Finance Minister Katsunobu Kato and U.S. Treasury Secretary Scott Bessent.
“Markets jumped the gun on pricing in further yen strength on confirmation that Bessent and Kato will discuss FX,” said Christopher Wong, a currency strategist at OCBC.
The euro steadied at $1.1359, hovering near Friday’s three-year high as investors flocked to the common currency following a crisis of confidence in the dollar.
“I think we could see the euro trading at $1.20 by something like … end of July, early August,” said IG’s Sycamore.
Growing nervousness among investors over owning U.S. assets has caused some to dump those positions and move money into other markets including Europe, boosting the euro.
The Australian dollar was up 0.08% at $0.6299, extending its more than 4% gain from last week.
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