The US Dollar slid versus the safe haven currencies during trade on Tuesday after the threat of more Chinese tariffs heightened concerns of an escalating trade war that could negatively impact global growth. Yesterday, the Trump administration said that they would impose a 10% tariff on good from China; Beijing cautioned that retaliation would be forthcoming if the tariffs were, indeed, assessed. That prompted market players to move toward the Swiss Franc and Japanese Yen as safe haven investments.
As reported at 11:01 am (BST) in Tokyo, the USD/JPY was trading at 109.848 Yen, down 0.63%; the pair has ranged from a session trough of 109.552 Yen to a peak of 110.575 Yen. The USD/CHF was trading at 0.99501 Swiss Francs, down 0.03215%; the pair has ranged from a low of 0.99182 Swiss Francs to 0.99776 Swiss Francs.
Trade War Could Benefit Greenback
Analysts have pointed out that a trade war would, in fact, be a benefit to the US Dollar as the tariffs on imports would push inflation higher in an already robust economy in which the Federal Reserve Bank has embarked on an aggressive cycle of interest rate increases. In the longer term, however, a global trade war would have a negative impact on countries which achieve growth from extensive foreign trade.