CORRECTED-FOREX-Dollar back under pressure, safe havens outperform

By Tom Westbrook and Alun John

SINGAPORE/LONDON, April 16 (Reuters) - The dollar resumed its descent on Wednesday, dropping across the board and losing the most ground to the Swiss franc and the euro as a new bout of tariff-induced nerves gripped markets.

The dollar has been a casualty of shaken confidence in the United States as radical tariffs have been threatened, enforced and then partially postponed over a wild few weeks for world trade and markets.

While it managed to find its footing earlier this week, even eking out small gains on Tuesday, by Wednesday, European trading of the U.S. currency was headed back towards last week's lows.

The latest jitters follow a U.S. decision to impose restrictions on chip exports to China, and President Donald Trump's launch of a probe into whether critical minerals should face tariffs.

The dollar was last down 0.7% against the Swiss franc at 0.8175 francs, just slightly above Friday's 10-year low and was also 0.4% lower against the Japanese yen at 142.69, after hitting a seven-month low earlier in the session. JPY=EBS CHF=EBS

The franc has appreciated the most amongst G10 currencies since the April 2 tariff announcement, and the resulting disinflationary effect could push the Swiss National Bank to bring rates back into negative territory

The SNB often intervenes directly in markets to limit the franc's moves, though given Washington's concern over such action, there would be risk of blowback.

Market speculation the SNB may not intervene could make traders feel more confident about buying the franc, said Chris Turner, global head of markets at ING.

"I'm sure the SNB would say that their hands aren't tied, but I think investors might be second guessing that," he said.

The franc's role as a safe haven at times of market stress along with the broader outperformance by European currencies were the primary drivers of its current strength, Turner added.

The euro has gained around 5% since tariffs were announced, benefiting as European investors pare back their massive allocations to U.S. assets.

While it saw a small pullback this week from a three-year high of $1.1474, it was up another 0.7% on Wednesday at $1.1356. EUR=EBS

Traders were also keeping an eye on talks between Japan's economy minister Ryosei Akazawa and Treasury Secretary Scott Bessent, as there is speculation the countries might agree on a stronger yen.

Positioning, however, as of last week's data, showed the largest net yen long on record stretching back to 1986, meaning there could be a heavy reversal if there are signs the talks do not go well. 1097741NNET

Also still to come are U.S. retail sales, an appearance from U.S. Federal Reserve Chairman Jerome Powell and a Bank of Canada meeting where markets are uncertain whether policymakers will cut or hold interest rates.

The Canadian dollar CAD=D3 was 0.3% stronger on the day at C$1.3916 per the U.S. currency up 4% so far this month, offering one of the starkest examples of how heavily investors have punished the dollar due to concern over erratic policymaking and a potential U.S. recession.

A rate cut is priced at about a 40% chance.

Britain's pound largely looked past cooler than expected inflation data and was last at $1.327, up 0.28% after hitting a new six-month high of $1.3292 earlier. GBP/

The Australian and New Zealand dollars, which last week notched their largest weekly rises since 2020, were a little off recent peaks but holding the high ground with the Aussie AUD=D3 at $0.637 and the kiwi NZD=D3 at $0.5913.

Markets made little immediate reaction to strong first-quarter growth and activity indicators from China.

The yuan steadied against the dollar on Wednesday, and was last at 7.3064 per dollar onshore, tracking weaker in its trading band. Offshore was 0.29% higher on the day at 7.3080 per dollar. CNY/

China has weakened the trading band of the yuan only slightly since the onslaught of tariffs that have topped 100%.