Dollar under strain, safe havens rise as Trump – Money News
By Rae Wee
SINGAPORE, Jan 19 (Reuters) – The greenback fell on Monday and traders unnerved by U.S. President Donald Trump’s newest tariff threats in opposition to Europe over Greenland piled into the safe-haven yen and Swiss franc, in a broad risk-averse transfer throughout markets.
Trump mentioned over the weekend he would impose an extra 10% import tariff from February 1 on items from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, till the United States is allowed to buy Greenland.
Major European Union states decried the tariff threats over Greenland as blackmail on Sunday, with France proposing to reply with a vary of beforehand untested financial countermeasures.
In the international exchange market, the initial knee-jerk response in early Asia commerce was to sell the euro and sterling, in a transfer that pushed them to a seven-week low and one-month trough of $1.1572 and $1.3321, respectively.
However, the 2 currencies bounced from their lows and it was the greenback that got here under strain as the trading day acquired underway, as traders assessed the longer-term implications of Trump’s newest transfer on the buck’s standing.
That helped the euro reverse its losses as it gained 0.17% to commerce at $1.1618, whereas the British pound equally recovered 0.1% to $1.3387.
“Typically you would think tariffs being threatened would lead to a weaker euro, but as we’ve seen last year as well, when the Liberation Day tariffs were getting put in place, the impact in FX markets actually has been more towards dollar weakness every time there is heightened policy uncertainty emanating from the U.S.,” mentioned Khoon Goh, head of Asia analysis at ANZ.
Investors had dumped the greenback within the wake of final April’s “Liberation Day” announcement when Trump unveiled sweeping tariffs on the world, triggering a disaster of confidence in U.S. belongings.
A related trend performed out on Monday, as the buck slid 0.24% in opposition to the safe-haven Swiss franc to 0.7989, and was down 0.31% to 157.63 yen.
The greenback index was little modified at 99.17.
“While you would argue that the tariffs threaten Europe, in fact, it’s actually the dollar that is bearing the brunt of it, because I think markets are pricing in increased political risk premia on the U.S. dollar,” mentioned Goh.
Elsewhere, the risk-sensitive Australian greenback was down 0.12% to $0.6683, with its losses capped by the broad greenback weak spot.
The New Zealand greenback rose 0.06% to $0.5755.
Cryptocurrencies, which are sometimes used as a gauge of risk sentiment, have been in the meantime offered off closely.
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