Dollar Fell Against Safe-Havens on Tariff News
August 2, 2019 | Friday
On Friday, the dollar was down against safe havens like the yen and Swiss franc in the early trading. However, it was higher against most of the other currencies. And this was due to the announcement of President Donald Trump of a sharp escalation of the U.S.'s trade dispute with China.
After the announcement the latest 10% tariff on $300 billion worth of Chinese goods, the yen hits its best day against the dollar in two years on Thursday. And the currency was at 106.95 to the dollar. Aside from that, it rose to its highest since April 2018 against the greenback earlier. In addition to that, the dollar fell against the franc at 0.9880. And it was after traders unwound carry trades in a broad risk-off move across every market.
The U.S.-China Trade War Meanwhile, Trump's announcement smashed the delicate truce with China over trade that was put in place ahead of the G20 summit about a month ago. Moreover, it signaled a sharp escalation of the dispute. And it is by adding tariffs on all U.S. imports from China. Then, some analysts expect that the move will boost the tariff on Chinese products to 21.5% from just 3% in 2017 when Trump took power.
Trump's decision came a day after Federal Reserve Chairman Jerome Powell had looked to the trade war as the biggest single risk facing the U.S. and global economies. A senior fellow at the Harvard Kennedy School stated, "The Fed's easing gives the President the breathing space to now play hardball."
Going back to the dollar, it was up against high yielders overnight. Also, it reached a 10-year high against the Aussie and surging sharply against the Korean won and kiwi. Then, the greenback also rose 1% against the offshore Chinese yuan. But China's central bank limited the fall in the official rate.
Furthermore, the dollar index hits its highest level since May 2017 at 98.697 overnight. And this was before retracting to 98.105 in European trading.
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