Dollar depreciates after climbing in the trade war between China and the US, contrary to market expectations. (Image: Reuters/Dado Ruvic)
The climb in the trade war between China and United Stateswhich began on April 2 with the announcement of reciprocal tariffs, raised stress in global financial markets – and volatility is already reflected in coins.
According to André Valério, senior economist of InterVix Volatility Index has shot and American actions have retreated strongly since the beginning of the month. “Typically this scenario would be consistent with a dollar appreciation, starting a safety race, with the resources of the rest of the world seeking the security of the dollar,” he explains.
However, this time, the behavior of the market surprised. The dollar devalued against major global currencies and interest on US 10 -year titles climbed – a sign, according to Valério, of loss of confidence in the US economy.
“This suggests that the current uncertainty caused by tariff policy has made investors global fear of the US economy, seeking greater liquidity and alternatives to the dollar,” he says. “In fact, since then, we have seen the euro and the yen stand out in this regard,” he adds.
Since early April, the euro and yen have rose about 4%, while the dollar accumulates nearly 3% globally in the same period. At the same time, Valério highlights the growing demand for European and Japanese titles – whose rates have increased with the perspective of the highest fiscal expense of Germany in response to the emptying of NATAN by the Trump government.
In addition, there is a prospect of a more contractionist Japanese monetary policy in the coming months. Factors in which it has guaranteed an additional attractiveness to these titles.
Will the dollar lose global protagonism?
Despite the recent weakness, Valério warns that it is still early to speak of a dollar relevance structural loss. The American currency follows as the main means of global exchange, supported by the US economic strength, its political stability and the bonds with strategic allies.
For him, a distance from these characteristics should decrease the call of the dollar to the rest of the world. “If the Trump administration does not provide the necessary stability for the US economy and, consequently, for the world economy, we can see the rest of the world increasingly seek alternatives and the persistence of the current trend of devaluation of the dollar,” says the economist.
And Brazil in this story?
In emerging markets, behavior is different. In Brazil, the dollar accumulates high of 2.8% in April, with the currency pressed by external and domestic uncertainties.
See the performance of the dollar against the real since the beginning of the month:
| Date | Last | Opening | Maximum | Minimum | Variation (%) |
|---|---|---|---|---|---|
| 16/04 | 5.8664 | 5.8868 | 5,916 | 5.852 | -0.33% |
| 15/04 | 5.8859 | 5,853 | 5.9044 | 5,833 | +0.53% |
| 14/04 | 5.8551 | 5.8658 | 5.8753 | 5.8279 | -0.17% |
| 11/04 | 5.8648 | 5.8855 | 5.92 | 5.8168 | -0.35% |
| 10/04 | 5.8856 | 5.8219 | 5.9556 | 5.8177 | +1.10% |
| 09/04 | 5.8215 | 6.0116 | 6.0966 | 5.8218 | -3.15% |
| 08/04 | 6.0109 | 5,9143 | 6.0199 | 5.8597 | +1.64% |
| 07/04 | 5,9139 | 5.8441 | 5.9325 | 5.8156 | +1.22% |
| 04/04 | 5.8425 | 5.6286 | 5.8541 | 5.6271 | +3.79% |
| 03/04 | 5,629 | 5.6635 | 5.6657 | 5.5929 | -0.56% |
| 02/04 | 5,6607 | 5.6818 | 5.7148 | 5.6487 | -0.37% |
| 01/04 | 5.6815 | 5.7052 | 5.7334 | 5.6729 | -0.41% |
Source: Investing
Source: Moneytimes
I am an author and journalist with a focus on market news. I have worked for a global news website for the past two years, writing articles on a range of topics relating to the stock market. My work has been published in international publications and I have delivered talks at both academic institutions and business conferences around the world.
