Investing.com – The dollar rose from lows against its rivals Tuesday after the plunge in U.S. Treasury yields stalled. Safe-haven buying emerged after President Donald Trump’s tweets raised fears that the trade war was not over.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.11% to 96.86, but was above a session low of 96.31.
Trump said in a tweet he was “Tariff Man,” reminding investors that he was not afraid to re-escalate trade tensions with China, scaling back optimism from a day earlier, prompting support for Treasuries and helping the greenback move off lows.
Falling Treasuries were blamed for the leg lower in the greenback earlier in the session, as fears of an economic recession grew after short-dated Treasury rates rose above longer-dated rates, referred to as an inversion of the Treasury yield curve, a signal of a potential economic recession.
Yields on two maturities at the front of the Treasury curve rose above longer-dated 5-year notes overnight Tuesday for the first time in more than a decade.
The pound, meanwhile, reversed its gains from earlier after Prime Minister Theresa May’s government was found in contempt of parliament for refusing to release its full legal advice on Brexit.