A Bloomberg dollar gauge slumped alongside Treasury yields after data showed weekly jobless claims rising more than estimated and the US economy shrinking in the first quarter. The releases followed a late-Wednesday halt by the US Court of International Trade on many of the Trump administration’s sweeping levies launched last month.
“The surprise court decision reinforces the depth of uncertainty overhanging the economy in 2025,” said William Adams, chief economist for Comerica Bank. “The second estimate of GDP for the first quarter demonstrates just how uncertainty is weighing on economic activity.”
While the dollar initially rose in Asia trading on the court ruling, momentum quickly stalled during the London session. The greenback fell against all Group—of-10 peers, with losses most pronounced against more volatile currencies including the Australian dollar and Swedish krona.
Traders are now faced with another layer of complexity in the global trade dispute that has roiled markets this year. The White House has already said it will appeal the trade court’s decision, while strategists say there are plenty of alternative routes the Trump administration could pursue to ensure his flagship economic policy is not derailed.
“It’s quite likely that the administration will find a way to challenge and potentially overturn this court ruling, but even still, what this serves to do is further undermine confidence in the larger US economic picture,” said Helen Given, a foreign-exchange trader at Monex Inc. “Continued instability and uncertainty on the global trade front is only continuing to erode the dollar’s status as a global haven currency.”
The Bloomberg Dollar Spot Index fell 0.3% as of 10:00 a.m. in New York. Yields on 10-year US Treasuries fell some four basis points to 4.44%, while the policy-sensitive two-year yield slipped around four basis points to 3.95%. US stock markets advanced at the cash open.
The Court of International Trade’s decision suspends the majority of Trump’s tariffs: the global flat tariff, elevated rates on China and others, and fentanyl-related tariffs on China, Canada and Mexico are all covered by the ruling. But others imposed under different powers are unaffected, including those on steel, aluminum and automobiles.
“I can’t see anything other than over the year a further weakening of the dollar, because the dollar is significantly overvalued,” Jim O’Neill, former chairman of Goldman Sachs Asset Management, said in an interview on Bloomberg TV. While the currency might stabilize temporarily on the possibility of lower tariffs, he expects further outflows from the US to other equity markets to drag the dollar down.
Goldman Sachs Group Inc. analysts said the judgment represents only a temporary setback to Trump’s trade agenda and can be offset by other taxes. The president could also invoke other authorities to impose tariffs on individual sectors or countries, as he did in his first term.
The ruling “significantly complicates ongoing trade negotiations as countries will now be unclear about the potential tariffs that could come into effect,” noted Citigroup economists including Andrew Hollenhorst, Veronica Clark and Gisela Young. “But it likely will not prevent the administration from being successful in raising significant new tariffs.”
Options Sentiment
Options traders remain bearish on the dollar over the next year, though with slightly less conviction. So-called one-month risk reversals — which track the difference in demand between bullish and bearish dollar bets — continue to show a preference for downside protection.
Data from the Depository Trust & Clearing Corporation reinforce that view. Despite the dollar’s sharp rebound in the spot market this week, bearish options positions still outpace bullish ones by approximately $13 billion in notional terms.
Options traders are the most bullish on the euro, Swiss franc, Norwegian krone and New Zealand’s dollar versus the greenback, based on the latest flow patterns and positioning metrics.
