CURRENCIES: Talk Of New Tariffs Extends Flight To Haven Currencies, Sparking Yen And Dollar Rally
June 19 2018 - 11:36AM
Dow Jones News
By Sara Sjolin, MarketWatch , Anneken Tappe
Japan's yen and the U.S. dollar were stronger against their
major rivals on Tuesday, as the escalating trade conflict between
the world's two biggest economies sent investors looking for safer
assets.
Trade tensions between the U.S. and China were already
heightened, when President Donald Trump threatened to slap new
import levies on up to $400 billion of Chinese goods
(http://www.marketwatch.com/story/trump-seeks-additional-200-billion-in-tariffs-against-china-and-threatens-even-more-2018-06-18)
late Monday, on top of the $50 billion his administration has
already detailed. China responded on Tuesday, saying Beijing will
have no choice but to take comprehensive measures in response to
the U.S.'s trade moves
(http://www.marketwatch.com/story/china-threatens-further-tariffs-on-us-products-as-trade-conflict-escalates-2018-06-19).
Don't miss: China's currency hits 5-month low as trade fight
with U.S. intensifies
(http://www.marketwatch.com/story/chinas-currency-hits-5-month-low-as-trade-fight-with-us-intensifies-2018-06-18)
In the foreign exchange universe, this led investors to flee to
haven currencies, which tend to provide both liquidity and relative
stability in times of volatility.
"Investors are concerned about a full-blown trade war," wrote
Viash Sreemuntoo, corporate trader at XE.com. "Escalating trade
actions and reactions [are] fueling a surge in the yen and this
trend is likely to continue."
The Japanese yen was higher versus all of its major crosses,
including the euro and British pound. The dollar bought Yen109.86,
down from Yen110.55 late Monday in New York, marking a one-week
low, while the euro fetched Yen127.11, compared with Yen128.50 on
Monday.
The dollar fared well against most currencies other than the
yen, helping lift the U.S. ICE Dollar Index 0.4% to 95.129.
The Swiss franc, also a haven currency, strengthened as well,
although to a lesser degree. The dollar last bought 0.9947 francs,
down 0.1%, while the euro traded at 1.1503 francs, down 0.6%.
The euro wasn't only caught in the haven trade, but also
weakened after European Central Bank President Mario Darghi said
that "significant monetary policy accommodation is still needed" to
support inflation, during a speech in Sintra, Portugal.
The euro dropped to $1.1561 from $1.1624 late Monday.
(END) Dow Jones Newswires
June 19, 2018 11:21 ET (15:21 GMT)
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