On Wednesday (April 16th) during the Asian trading session, the foreign exchange market was hit by a storm, with the US dollar index plummeting 0.77% to 99.39, completely giving up Tuesday's gains. The trigger for this wave of US dollar selling is the upcoming US Japan trade negotiations, and the market is concerned that the US may reach an agreement with Japan on the appreciation of the yen. At the same time, the Swiss franc, euro, and Japanese yen all rose, and the pound soared to a six-month high. The global foreign exchange market is undergoing a profound reshaping.

The US dollar is experiencing a comprehensive sell-off

The US dollar is becoming the biggest victim of uncertainty in US trade policy. From threatening to impose tariffs to temporarily suspending their implementation, the White House's wavering trade policies have led investors to reduce their holdings of US dollar assets. After a brief pullback, the euro regained its upward momentum and rose 0.9% to $1.1384 against the US dollar; The Swiss franc has performed particularly well, becoming the currency with the largest increase among the G10 currencies, strengthening nearly 1% against the US dollar. Market analysts point out that this comprehensive sell-off of the US dollar reflects investors' wavering confidence in the US economy.

The strong rise of the pound and yen

The pound continued its astonishing rise, reaching a six-month high of $1.3288 at one point. This is mainly due to the UK successfully avoiding the most severe tariff threat from the US, coupled with the positive signal from US Vice President Vance that the US and UK are expected to reach a trade agreement. The Japanese yen also performed well, with the US dollar falling 0.8% against the yen at one point to 142.10, approaching a six-month low of 142.06. Investors are closely monitoring the upcoming high-level talks between the United States and Japan, and any hint of allowing the yen to appreciate could trigger greater volatility in the foreign exchange market.

Market focuses on three major risk events

In addition to the US Japan negotiations, today's market will also face three tests: US retail sales data, Federal Reserve Chairman Powell's speech, and the Bank of Canada's interest rate decision. Particularly noteworthy is the US treasury bond bond market. Steve Englander, head of G10 foreign exchange research at Standard Chartered Bank, pointed out that "the recovery of the positive correlation between US bond yields and the US dollar will be an important signal for the market to return to normalization." Traders generally believed that only the strong performance of US economic data could reverse the current decline of the US dollar.

summarize

At a critical moment of reshaping the global trade landscape, the hegemony of the US dollar is facing unprecedented challenges. The US Japan trade negotiations may become the last straw that breaks the US dollar, or a turning point for the dollar to regain its upward momentum. As market uncertainty continues to ferment, investors need to be vigilant about the risk of severe fluctuations in the foreign exchange market. This currency war, triggered by a trade war, is entering a white hot stage.