Skip to main content

Sorting through the post-liberation mess in currencies

President Trump’s extraordinary “Liberation Day” announcement has prompted a major risk-off event across financial markets, sending safe-haven currencies soaring and commodity currencies crashing. It has also put paid to the idea that his aggressive tariff plan would result in a stronger dollar. Instead, the greenback has dropped sharply on intensifying fears of a US recession and a broader unwind of US financial market exceptionalism. Both the extent of US tariffs and China’s retaliatory measures today are greater than we had anticipated, and the dollar’s drop in response is perhaps even more surprising. We are reassessing our forecasts in light of these developments, as well as the ongoing market turmoil, and will publish new ones in our FX Markets Outlook next week.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services


Get access