Saqib Iqbal Ahmed
(Reuters) - The dollar fell all on Monday, abandoning earnings from the previous week as the markets slashed the outlook for President Donald Trump's tariff policy and its potential to damage growth and Stoke's inflation.
After Trump said Friday he plans to fulfill imports of steel and aluminum to 50% start, the U.S. currency fell to Wednesday, with Beijing opposing allegations that violated the agreement on key minerals.
The allegations were "unfounded" and promised to take unspecified powerful measures to safeguard its interests, the Ministry of Commerce of China said on Monday. Treasury Secretary Scott Bessent said on Sunday that Trump and Chinese President Xi Jinping will call soon, "This will be eliminated."
Michael Brown, a market analyst at London online brokerage Pepperstone, noted that the sales pressure on the dollar is widespread.
"Whenever we see a revival of tariff issues, everyone is back in the 'selling U.S.' trade again," Brown said.
The dollar fell 0.8% to 142.85 yen, nearly eliminating gains on the Japanese currency last week.
The euro rose 0.8% to $1.14,355, the highest level since late April. Later this week, the focus will be on the European Central Bank's interest rate decisions and subsequent outlook.
The dollar extended losses after data showed that our manufacturing industry signed for the third straight month, and suppliers spent longer in tariffs to deliver inputs, which could send out shortages in certain commodities.
Earlier in the meeting, data showed that European manufacturing took a steady step in May, but factory activity in Asia fell.
The U.S. dollar index measures its performance against the other six major currencies, down 0.6%, while the price of 98.75 is slightly higher than the three-year low of 97.923 hit in late April.
Trump's one-time trade war has whipped the U.S. currency for weeks, and investors have been questioning the currency's security status as it is amid tensions about a potential U.S. recession.
"We expect the dollar to continue to weaken (in the next 12 months) as U.S. interest rates and peers grow," Morgan Stanley strategists said in a note on Sunday.
The dollar gained some respite last week, rising 0.3% after trade talks with the EU were back on track, with the U.S. Trade Court blocking most of Trump’s tariffs on the grounds that he surpassed his authority.
The appeals court resumed its duties a day later, and Trump's administration said there are other ways to implement those duties if they lose in court, but many analysts say it shows that it is still being checked on the president's power.
Fiscal worries have also caused a widespread "selling the United States" theme, which has caused the dollar assets from stocks to Treasury bills to drop in recent months.
As the Senate begins to consider the government’s tax cuts and spending bill, it has begun to focus on this week’s focus, with an estimated $3.8 trillion in federal debt rising by $36.2 trillion over the next decade.
According to Barclays analysts, the fate of Section 899 of the bill may be crucial.
"S899 will enable U.S. tax companies and investors from countries and investors that are considered 'unfair foreign tax', and can be regarded as tax on U.S. capital accounts when investors are nervous about U.S. assets," they said in a research note.
Elsewhere, Polish Zloty hit a two-week low on the euro after Eurosceptic Karol Nawrocki won the second round of the presidential election, which sparked uncertainty in the market.
Bitcoin is the world's largest cryptocurrency by market capitalization, down 0.7% on the day to $104,315.
(Reports by Saqib Iqbal Ahmed; other reports by Kevin Buckland and Johann M Cherian; Edits by Bernadette Baum, Tomasz Janowski, Mark Potter and Rod Nickel)