ADVERTISEMENTThe euro surged to a more than three-year high against the US dollar during Friday’s Asian session, as investors continued to offload US assets amid US President Donald Trump’s chaotic tariffs. The EUR/USD pair jumped from the mid-1.09 range to as high as 1.1387, extending gains seen since Thursday after Trump paused reciprocal tariffs on all countries except China, where he raised the levy to 145%.
Alongside the euro, other G10 currencies also strengthened against the greenback, particularly traditional haven currencies such as the Swiss franc and the Japanese yen. By 4:40 a.m. CEST, the USD/CHF pair tumbled below 0.82—a level not seen since January 2015, when the Swiss National Bank abandoned its 1.20 peg to the euro. Meanwhile, the USD/JPY pair plunged to just above 143, its lowest level since September 2024. The US Dollar Index, which measures the currency against a basket of foreign currencies, also dropped below 100—its lowest reading since July 2023.
“There’ll be a transition cost, and transition problems, but in the end it’s going to be a beautiful thing,” Trump stated at the White House on Thursday. “We’re in very good shape.”
However, financial markets responded in the opposite manner, with further weakness in the US dollar, renewed sell-offs on Wall Street, and continued pressure on US Treasuries. Investors appear to be fleeing American assets amid the tariff-driven uncertainties.
On Thursday, the US Bureau of Labor Statistics released cooler-than-expected US inflation. The data may have also added to the weakness of the US dollar, in turn pushing up other major currencies. Markets expect the Federal Reserve to do more rate cuts this year due to economic risks, although officials reiterated caution due to higher inflationary pressure associated with the tariffs.
Gold hits record high as US government bonds fall
Gold prices have soared by 8% since Wednesday, following Trump’s decision to put a 90-day pause on reciprocal tariffs. The precious metal, long viewed as a safe-haven asset, had declined earlier in the week as investors sold off holdings to cover losses in other risk assets. By 4 a.m. CEST, spot gold surged to $3,218 per ounce, while COMEX gold futures reached $3,238 per ounce—both record highs.
According to a Bloomberg report, Chinese investors injected $1 billion (€0.88 billion) into gold exchange-traded funds (ETFs) last week since Trump announced the steep tariffs on China. Meanwhile, the World Gold Council reported that global gold-backed ETFs peaked at a monthly high of $345 billion (€305 billion) in March.
In contrast, US government bonds, traditionally seen as safe assets, resumed sell-offs on Thursday. Yields on the 10-year and 30-year Treasuries rose by 11 and 21 basis points, respectively. As bond prices fall, yields rise, reflecting the cost of government borrowing. The pronounced sell-off in long-dated US Treasuries since the start of the week suggests that investors are demanding higher risk premiums amid a deteriorating outlook for the US economy.
European markets to rise despite renewed Wall Street sell-offs
After a historic rally, US equities resumed sell-offs on Thursday. The S&P 500 slumped 3.46%, the Nasdaq declined by 4.31%, and the Dow Jones Industrial Average fell 2.5%, signalling persisting market unease despite recent policy shifts.
Broader Asian markets largely followed suit on Friday. As of 5:30 a.m. CEST, Japan’s Nikkei 225 dropped 3.9%, South Korea’s Kospi slid 0.8%, and Australia’s ASX 200 declined by 1.3%. However, China’s Hang Seng Index managed to rise by 0.6%.
Despite the global risk-off sentiment, futures pricing indicates a higher open in European markets. At 5:30 a.m. CEST, the Euro Stoxx 50 was up 0.57%, Germany’s DAX rose by 0.61%, and the FTSE 100 gained 0.49%.