Dollar Slides as Weak U.S. Data and Trade Tensions Boost Safe-Haven Currencies

The U.S. dollar hovered near an 11-week low on Wednesday, weighed down by falling short-term Treasury yields following weak economic data. Meanwhile, the yen strengthened as investors sought safety amid escalating trade tensions, while the Canadian dollar neared a two-week low.

The U.S. dollar index dipped 0.1% to 106.17, approaching Monday’s low of 106.13, the weakest level since December 10. The greenback’s decline follows disappointing U.S. economic indicators, including a steep drop in consumer confidence. The Conference Board reported a decline to 98.3, missing economists’ forecasts of 102.5, marking the largest fall since August 2021.

Market expectations for Federal Reserve rate cuts have intensified, with traders now pricing in two quarter-point cuts this year, potentially starting in July. The two-year U.S. Treasury yield slid to 4.086%, nearing its lowest level since November 1. Treasury Secretary Scott Bessent noted that economic fragility is more pronounced than surface metrics suggest, citing inflation and government-driven job growth.

The yen gained, with the dollar slipping 0.1% to 148.865 yen, approaching Tuesday’s low of 148.56, its weakest since October. The euro inched up 0.1% to $1.0520, while sterling held steady at $1.2669, close to a two-month peak. The Australian dollar eased to $0.6339 after inflation data signaled no major shift.

Bitcoin dipped 0.5% to $88,246 after a 5.6% drop on Tuesday, driven by market jitters over U.S. tariffs and fallout from a $1.5 billion Bybit hack. Uncertainty surrounding trade policy continues to weigh on risk assets while boosting demand for safe-haven currencies.