The U.S. dollar weakened against a basket of major currencies on Monday, hitting a 10-day low against the Japanese yen following a surprise downgrade of the United States’ sovereign credit rating and renewed global trade tensions.
Moody’s Investors Service downgraded the U.S. government’s credit rating by one notch on Friday, citing concerns over the country’s expanding $36 trillion debt. The move triggered a wave of selling in U.S. assets and sent the dollar lower after four consecutive weeks of gains.
The greenback fell as much as 0.7% to 144.665 yen, its lowest level since May 8. The euro rose 0.73% to $1.1247, while the British pound advanced 0.79% to $1.3385, its highest point since late April, after the UK announced a major reset of its trade and defence ties with the European Union.
U.S. stock futures were also under pressure, with S&P 500 futures down 1.1%. Yields on U.S. 10-year Treasuries climbed 11.5 basis points to 4.5545%. European stocks showed smaller losses, with the STOXX 600 index down 0.6%.
China urged the United States to adopt responsible economic policies to safeguard global financial stability, following Washington’s recent moves to raise tariffs on trading partners that refuse to negotiate under new terms. The U.S. also resumed serious trade talks with the European Union, adding to a flurry of recent activity that includes a framework deal with the UK and discussions with India, South Korea, and Japan.
The dollar also weakened 0.41% to 0.8334 against the Swiss franc, while commodity-linked currencies gained. Australia’s dollar rose 0.66% to $0.6446 ahead of a central bank decision on Tuesday, and New Zealand’s dollar was up 0.6% to $0.5914.
