TOKYO, May 26 — The euro jumped along with risk-sensitive currencies like the Australian dollar today after President Donald Trump backed down from threatened 50 per cent duties on European Union shipments from June 1, after the bloc asked for time to "reach a good deal".
The dollar continued its slump against a broad swathe of currency peers as Trump's policy reversals, as well as his sweeping spending and tax-cut bill currently in legislation, turned investors off from US assets.
"The 'Sell America' theme, which obviously was the dominant theme back in April, is back on show," said Ray Attrill, head of FX research at National Australia Bank.
"Markets have probably taken the view - and probably rightly so — that where we land eventually on a tariff situation between the US and the EU is not going to be at 50 per cent, but how we get there is frankly anybody's guess at the moment."
The euro climbed as much as 0.55 per cent to reach US$1.1418 for the first time since April 29.
The Aussie jumped 0.58 per cent to US$0.6537, a level not seen since November 25. The New Zealand dollar soared 0.75 per cent to the highest since November 7 at US$0.6031.
Sterling advanced as much as 0.38 per cent to scale its highest level since February 2022.
The safe-haven yen and Swiss franc were overall weak as market sentiment improved, but they still appreciated against the embattled US dollar.
The greenback slipped as much as 0.24 percent cent to 142.23 yen, the lowest level this month, and edged to a 2-1/2-week low of 0.8193 franc.
The US dollar index, which tracks the currency against six major rivals, sank 0.3 per cent to 98.813, extending a 1.9 per cent tumble from last week.
Trump announced the decision to put off EU tariffs until July 9 yesterday, following a call with European Commission President Ursula von der Leyen, who asked for more time to reach an agreement. July 9 is the end of the 90-day pause on Trump's April 2 ‘Liberation Day’ levies on the EU and most other trade partners.
The de-escalation just two days after Trump issued the threat is a stark reminder of how suddenly US trade policy can turn, even as it encouraged investors that deals can be struck and calmed worries about a global downturn.
— Reuters
