By Chibuike Oguh and Alun John
NEW YORK/LONDON (Reuters) – The dollar lost ground against its major peers, including the Swiss franc and Japanese yen, on Tuesday as trade tensions between the United States and China resurfaced, while the euro strengthened after the French government proposed suspending a landmark pension reform.
The dollar weakened 0.37% to 0.801 Swiss francs and fell 0.37% to 151.71 yen, a day after rising against both currencies.
“The market got a little caught up yesterday,” said Marc Chandler, chief market strategist at Bannockburn Capital Markets. “People wanted to believe that trade tensions between the United States and China had eased, but clearly that is not the case.”
The United States and China on Tuesday began charging additional port fees to shipping companies that transport everything from Christmas toys to crude oil.
In addition, Beijing announced countermeasures against five subsidiaries of the South Korean shipbuilding company Hanwha Ocean linked to the United States. China also said it was investigating how its domestic shipping industry could be affected by a US Section 301 investigation into allegedly unfair trade practices by foreign countries.
The tit-for-tat measures undermined what appeared to be a conciliatory tone from US President Donald Trump over the weekend that had helped fuel some optimism earlier this week.
US stocks were mixed in choppy trading. The Dow Jones Industrial Average rose 203.54 points, or 0.44%, to 46,271.12. The S&P 500 fell 10.34 points, or 0.16%, to 6,644.39 and the Nasdaq Composite fell 172.91 points, or 0.76%, to 22,521.70.
“I think what’s happening is that markets don’t think this is going to be a long-term issue, especially given last year’s story that started in April,” said Joseph Trevisani, senior analyst at FX Street.
“China initiated this particular round… but it is not in the long-term interest of the United States or China for this to continue.”
The U.S. labor market remained stuck in its doldrums of low hiring and layoffs through September, although the economy “may be on a somewhat firmer trajectory than expected,” Federal Reserve Chair Jerome Powell said on Tuesday.
French Prime Minister Sebastien Lecornu suspended a historic 2023 pension reform until after the 2027 presidential election, bowing to pressure from left-wing lawmakers who had demanded such a measure to ensure their political survival.
The euro extended its gains against the dollar following the announcement. It rose 0.33% to $1.1606.
“It looks like there will be less fiscal austerity than the previous government. French bonds are having a good day: they are the best performers in the euro zone,” Chandler added.