In early trading today in Europe, the dollar fell against safe havens such as yen and Swiss franc, after the president announced a sharp acceleration of the US trade war with China.
After a new 10% tariff on $300 billion worth of imports from China, the yen had its best day against the dollars in two years.
By 0700 GMT, it hit 106.95 to the dollar, having risen to its highest since April 2018, while the dollar was lower against the franc at 0.9880.
Any hopes of a fragile truce lasting with China have now been shattered. A truce that had been hastily put in place ahead of the G20 summit. President Trump’s announcement now represents a sharp escalation of the conflict, by extending tariffs to almost all US imports from China. This, therefore, increases the risk of higher prices being fed for US consumers.
Analysts are predicting that the move will raise the average tariff on Chinese products to 21.5%, from just 3% in 2017, when Trump was elevated to president.
Trump’s bold move comes just one day after the Federal Reserve chairman, Jerome Powell, referred to the trade dispute as the biggest single risk facing the US and global economies.
The dollar hit a 10-year high against AUD, while also rising sharply against KRW and NZD.
Indeed, the impact on the euro and GBP was much less severe, however some reports claim that Trump is expected to make an announcement on trade with the European Union later today.
According to the dollar index, it hits its highest level since May 2017 at 98.697 overnight, before steadying to 98.105 in European trading.
Non-farm payroll growth is expected to have slowed to 160,000 from 224,000 in June, while the escalation of the trade war threatens to overshadow the release of the U.S. labor market report for July.
Keeping up-to-date with foreign currency exchange rates will give you a good foundation for trading and allow you to better identify good investments in the long run. To learn more, start trading with a simple, yet effective broker, visit TIOmarkets.