Investors sell greenback, seek safety as Trump – Money News
Jan 19 (Reuters) – Investors headed for secure havens whereas Europe ready to push back on Monday after U.S President Donald Trump threatened escalating tariffs on allies in the best way of his ambition to buy the Danish arctic territory of Greenland.
Trump stated further 10% tariffs would take impact on February 1 on items from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Great Britain, rising to 25% on June 1 until some kind of Greenland deal is struck.
Precious metals and bonds rallied, shares had been down and the greenback decrease in response in Asia commerce. The euro, yen and Swiss franc had been all increased. [MKTS/GLOB]
Here are analyst and investor feedback on Trump’s threatened tariffs:
KHOON GOH, HEAD OF ASIA RESEARCH, ANZ, SINGAPORE
“Typically you would think tariffs being threatened would lead to a weaker euro, but … the impact in FX markets actually has been more towards dollar weakness every time there is heightened policy uncertainty emanating from the U.S.
“I feel markets are pricing in elevated political risk premia on the U.S. greenback.
“The big question now is how much and how hard does Europe push back against President Trump over this issue. For now, it looks like the U.S.-EU trade deal is probably not going to be in place and the U.S.-UK trade agreement as well is now up in the air.”
VISHNU VARATHAN, HEAD OF MACRO RESEARCH, ASIA EX-JAPAN, MIZUHO, SINGAPORE
“It throws the so-called agreements out of the window now…(and) that reassessment is probably triggering some risk repricing.
“Markets actively have to reassess very key assumptions round euro/greenback, which has obtained a enormous affect in your greenback assumptions, specific restoration tales in Europe, given the most recent knowledge led us to consider Germany had simply turned a nook.
“(Trump) is still willing to use tariffs with abandon and making threats and belittling partners. So we’re not over the phase.”
CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE
“Markets have learned that tariff threats get watered down or delayed, so the initial reaction tends to be cautious rather than panic. But linking tariffs to geopolitics feels less like trade bargaining and the uncomfortable truth for markets is that it raises the odds of tariffs becoming a tool for non-trade disputes. This is harder to price, and potentially demands a stickier risk premium.
“Even with out huge tariff hikes, uncertainty could make firms delay capex and supply-chain choices, which could possibly be a slower-burn drag on growth. If we get firm dates, sector targets, or EU retaliation, volatility can broaden.”
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