U.S. Dollar Strengthens Amid Trade Uncertainty

NEW YORK (Reuters) – The U.S. dollar rose against major currencies including the euro and the Swiss franc on Thursday as currency markets largely shrugged off President Donald Trump’s latest tariff missives, except in Brazil where a threatened 50% levy sent the real sliding.

Investors were eager for riskier assets, with the most damaging tariff scenarios looking increasingly unlikely. This optimism helped Nvidia (NASDAQ:NVDA) become the first stock ever to reach a $4 trillion valuation and lifted cryptocurrency bitcoin to an all-time peak above $113,000.

Benchmark 10-year U.S. Treasury yields edged higher after data showed that jobless claims unexpectedly fell last week. The yield on benchmark U.S. 10-year notes rose by 1 basis point to 4.352%.

Optimism was also buoyed by minutes from the Federal Reserve’s last meeting, where most policymakers expressed that interest rate cuts would be appropriate later this year. Juan Perez, director of trading at Monex USA in Washington, noted that the U.S. dollar is benefitting partly from a realization that, despite tariff volatility, the U.S. economy remains pivotal in the global trading system.

> “What should you do when the U.S. is acting up? Well, it is still to hold on to the U.S. dollar. In a weird way, this whole tariff talk and the suddenness of it just demonstrate the powerful idea of leverage,” Perez said.

The dollar strengthened 0.37% to 0.797 against the Swiss franc, on track for gains after two consecutive sessions of losses. It remained flat at 146.235 against the Japanese yen.

The euro fell 0.23% to $1.1692, set for two straight losses against the greenback. The dollar index, which measures the currency against six major peers, was up 0.27% at 97.638, poised for gains after losing ground in the previous session.

President Luiz Inacio Lula da Silva of Brazil expressed a desire to seek a diplomatic solution to Trump’s 50% tariffs threat on Brazilian exports but vowed to retaliate if imposed on August 1. Brazil was initially slated for just a baseline 10% levy, but Trump cited not only trade practices but also the treatment of its former president, Jair Bolsonaro.

Bolsonaro, who was friendly with Trump during their terms, is currently on trial for plotting a coup to prevent Lula from taking office in January 2023.

The real dropped as much as 2.8%, marking its first significant decline since June 6. It ended the session down 0.56% at 5.5433 per dollar.

With the exception of Brazil, Trump’s latest letters to trade partners contained tariff rates similar to those proposed in his original “Liberation Day” announcement on April 2, and also consistent in other letters this week.

Bitcoin rallied to a new all-time high, supported by rising demand from institutional investors and Trump’s crypto-friendly policies. The world’s largest cryptocurrency rose to a fresh record high of $113,820.49 during the session, marking a 21% increase this year.