Yen, Swiss Franc Surge as Trump Tariffs Trigger Global Recession Fears and Aussie, Kiwi Slide

Investors fled risk assets on Monday, seeking refuge in safe havens like the yen and Swiss franc as U.S. President Donald Trump’s sweeping tariffs intensified market fears of a global recession. The yen rose sharply, with the dollar down 0.45% at 146.21, recovering from earlier losses of over 1%. The Swiss franc surged more than 0.6% to 0.8548 per dollar, extending its recent strong performance.

Meanwhile, the Australian dollar, highly sensitive to risk sentiment, dropped to a five-year low before slightly rebounding to $0.6005, down 0.66%. The New Zealand dollar also dipped 0.38% to $0.5575. Analysts said the selloff in USD/JPY reflects growing concerns over a U.S. recession and plunging U.S. bond yields.

Trump’s new tariffs wiped out nearly $6 trillion in U.S. stock value last week. While he downplayed the fallout, calling it “medicine” for the economy, global markets reacted with panic. China responded with 34% tariffs on all U.S. goods, calling the market reaction a clear signal.

U.S. interest rate expectations have shifted dramatically. Futures now price in a 55% chance of a Fed rate cut in May and over 100 basis points of easing by year-end. Despite the dollar’s usual safe haven status, it weakened as investors seek diversification amid U.S. growth concerns.

The dollar index was steady at 102.81 after a 1% drop last week. The euro ticked up 0.03% to $1.0967, while sterling slipped 0.11% to $1.2892. China’s onshore yuan fell to a two-month low at 7.3145, with the offshore yuan weakening to 7.3193, following a soft midpoint fix by the PBOC.

Gold and government bonds also climbed on safety bids, highlighting market anxiety.