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Trump's Truth Social message reassures traders

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Dollar edges up versus yen and Swiss franc

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Aussie dollar gains, pound weakens

(Updates prices throughout, adds fresh analyst quote)

By Chibuike Oguh and Amanda Cooper

NEW YORK/LONDON, Oct 13 (Reuters) - The dollar edged

higher against major peers on Monday, after a change in rhetoric

from U.S. President Donald Trump lowered the temperature of

simmering trade tensions with China, while political

developments in France and Japan undermined the euro and the

yen.

The U.S. dollar strengthened 0.78% to 0.805 against the

Swiss franc after losing ground in the previous session

after Trump announced 100% tariffs on China.

The broadside revived bad memories of Trump's Liberation Day

rollout of sweeping tariffs in April and sparked a selloff in

stocks and cryptocurrencies on Friday.

"It's kind of a repeat of what happened after Liberation

Day," said Eugene Epstein, head of trading and structured

products at Moneycorp in New Jersey.

"Traditionally, the U.S. dollar strengthens when there's any

kind of risk off or any kind of stress across asset classes or

markets and, like Liberation Day, the opposite happened because

of trade tensions between the U.S. and fellow trade partners in

this case, China. Any time something like that comes up people

actually sell the U.S. dollar," Epstein said.

The dollar index, which measures the U.S. currency's

performance against a basket of six others, was last up 0.27% at

99.32, recovering from the previous session's drop.

TRUMP SOFTENS TONE

After announcing the 100% tariffs on Friday, Trump said on

Sunday: "Don't worry about China, it will all be fine!"

"Highly respected President Xi just had a bad moment," he

posted on the Truth Social network. "He doesn't want Depression

for his country, and neither do I. The U.S.A wants to help

China, not hurt it!!!"

U.S. Treasury Secretary Scott Bessent said on Monday he was

confident the standoff could be "de-escalated," which curbed

some of the dollar's gains.

"I still believe across all developed currencies, the U.S.

dollar is still the primary safe haven; obviously, the Swiss

franc is as well. With what happened last week, it was just

essentially the same playbook: any kind of trade tensions means

sell the U.S. dollar. Today, things are reversing because the

trade tensions are seemingly de-escalating a little bit,"

Epstein added.

European markets broadly shrugged off the French

presidency's announcement of Prime Minister Sebastien Lecornu's

new cabinet lineup on Sunday, reappointing Roland Lescure, a

close ally of Emmanuel Macron, as finance minister.

The euro was last down 0.43% at $1.1564 after

advancing against the dollar in the previous session.

Against the Japanese yen, the dollar strengthened

0.81% to 152.36. A public holiday in Japan made for thinner

trading.

Markets meanwhile assessed the path ahead for new Liberal

Democratic Party leader Sanae Takaichi after Komeito quit

Japan's ruling coalition on Friday, dealing a blow to her hopes

of becoming the first female prime minister of the world's

fourth-largest economy.

Traders will often borrow in a low-yielding currency to

invest in a higher-yielder, known as a carry trade. The Japanese

yen and Swiss franc have typically been funding currencies and

took a harder knock than others on Monday.

The Australian dollar, which tends to rally in a risk-on

environment, rose 0.65% to $0.6511, making it one of the

best-performing major currencies against the dollar on Monday.

Sterling weakened 0.25% to $1.3324. The dollar

weakened 0.14% to 7.137 versus the offshore Chinese yuan.

The crypto sector last Friday experienced over $19 billion

in liquidations of leveraged positions, which market players

said were the largest in history, after Trump announced the

tariffs on Chinese imports and hinted at possible export

restrictions on key software. On Monday, bitcoin was down

0.60% to $114,375.22 while ethereum declined 0.54% to

$4,120.42.