Dollar’s Weekly Gain Looks Like a Blip as Pressures Mount

Vassilis Karamanis and Anya Andrianova

Fri, May 30, 2025, 9:29 AM 3 min read

(Bloomberg) -- The best week for the dollar in three months isn’t enough to reverse its broader declines as US trade and policy uncertainty weighs on sentiment.

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A gauge of dollar strength is on track for its longest monthly losing streak in five years despite being up 0.4% so far this week. Investors were focused on a proposed US measure that would hit companies from countries deemed to have “discriminatory” tax policies.

“If the bill as presently written takes effect, it would deter foreign investment in US assets at a time when the country faces increasing reliance on foreign capital to finance its ballooning debt,” wrote Elias Haddad, a strategist at Brown Brothers Harriman & Co. in a note. “Clearly, this is not good for the dollar.”

Concern that President Donald Trump’s erratic trade policies will undermine the economy are adding to the greenback’s weakness and eroding its appeal as a traditional haven bet. A court battle is underway over the legality of Trump’s sweeping tariffs — though the US administration insists they’re here to stay.

The Bloomberg Dollar Spot Index pared earlier gains to trade up 0.1% on Friday as reports showed US consumers hitting the brakes on spending in April while goods imports plummeted by a record as companies adjusted to higher tariffs. US consumer sentiment rebounded in late May, according to the University of Michigan.

The latest data is “still insufficient for the Federal Reserve to seriously consider its cuts,” said Yusuke Miyairi, a foreign-exchange strategist at Nomura. “Choppy price action in the dollar continues, owing to the market following back-and-forth tariff headlines.”

On Friday, Trump accused China of violating an agreement with the US to ease tariffs, intensifying tensions between the world’s two largest economies again. Earlier in the week, stronger-than-expected economic data lifted the dollar amid a global bond rally. But on Thursday, the greenback weakened after weak jobs results.

Meanwhile, a gauge of emerging-market currencies is on track for its first weekly loss since mid-April as investors scale back on risk following recent gains. The South African rand slumped more than 1% against the dollar on Friday.

While currencies including the rand and Mexico’s peso have strengthened more than 4% against the greenback since Trump unveiled his comprehensive list of tariffs, traders are taking some profits amid renewed global trade noise.