The dollar weakened on Monday and traded near a four-month low against major currencies as concerns over a global trade war unsettled investors, lifting the safe-haven yen and Swiss franc.

The market has been fixated on trade tensions since U.S. President Donald Trump imposed tariffs on major trading partners only to delay some of them for a month amid growing signs and concerns of a U.S. economic slowdown.

That has caused investors to lose confidence in the U.S. economy, which has outperformed its peers. In currency futures, investors have cut their net long dollar position to $15.3 billion from a nine-year high of $35.2 billion in January.

Risk-averse investors have sought out the Japanese yen and Swiss franc instead, sending both currencies to multi-month highs. On Monday, the yen was up 0.25% at 147.68 per dollar, just below a five-month high of 146.94 hit on Friday. The Swiss franc hit a three-month high of 0.87665 per dollar on Monday.

The euro was steady at $1.0842 after posting its best weekly performance since 2009 last week, boosted by Germany's game-changing fiscal reforms. The dollar index, which measures the U.S. currency against a basket of six major currencies, last stood at 103.83 on Monday, near a four-month low hit last week. The dollar fell more than 3% last week against a basket of major currencies, posting its weakest weekly performance since November 2022 as investors worried about tariffs and their impact on the economy. Adding to investor concerns, Trump in an interview with Fox News on Sunday declined to predict whether the U.S. could face a recession amid stock market concerns about his tariffs on Mexico, Canada and China.

Trump's comments sent U.S. stock futures lower, while the 10-year U.S. Treasury yield fell 3 basis points in Asian trading hours, weighing on the dollar. "If Trump wants to weaken the dollar, lower yields ... then that certainly adds to the idea that maybe the dollar can't strengthen or can't move higher aggressively," said Parisha Saimbi, Asia-Pacific rates and FX strategist at BNP Paribas in Singapore. "FX investors are in a broad de-risking mode." Investors also digested data from Friday showing U.S. job growth accelerated in February, but cracks were emerging in a once-resilient labor market amid chaotic trade policy.

Nonfarm payrolls increased by 151,000 jobs last month after rising by 125,000 in January, according to the Labor Department's Bureau of Labor Statistics. Economists polled by Reuters had forecast payrolls rising by 160,000 jobs after a previously reported gain of 143,000 in January. Citi strategists said the data should make the Federal Reserve comfortable keeping interest rates on hold at its meeting this month, but the details of the jobs report, including a rise in the unemployment rate and a decline in participation, suggest the labor market could weaken further this spring. (Newsmaker23)

Source: Reuters