Dollar Suddenly Weakens as Investors Flee for Yen & Franc Due to “Tariff Drama”
The US dollar weakened against all major G-10 currencies after President Donald Trump threatened new tariffs on several European countries. When geopolitical issues heat up, investors tend to seek “safe havens,” and this time the Japanese yen and Swiss franc were targeted.
The main trigger came from Trump's tariff threats against eight European countries, including Denmark and the UK, allegedly related to planned symbolic NATO military exercises in Greenland. Market sentiment immediately shifted to risk-off, driving a movement into safe haven currencies.
Exchange rate movements showed this pattern: USD/JPY fell 0.3% to 157.60, while USD/CHF weakened 0.4% to 0.7998. At the same time, gold also hit a new record—a classic sign of a market “seeking safety.”
In Europe, the euro and pound strengthened. EUR/USD rose 0.2% to 1.1621 after falling earlier in the session, while GBP/USD rose 0.1% to 1.3393, having touched an intraday low of 1.3331. Market participants cited short-covering as a contributing factor to the strengthening of the euro and pound.
Overall, the Bloomberg Dollar Spot Index fell 0.2%. On the bond front, US 10-year futures edged up after a sharp decline in the previous session—but US markets were also quiet due to a national holiday.
Additional highlights include the Fed's blackout period, while US bond and stock markets were closed for the Martin Luther King Day holiday. This thinner liquidity often makes for sharper FX movements when major headlines emerge.
5 Key Points:
- The US dollar fell against all G-10 currencies after Trump's tariff threats against Europe.
- Investors went into safe-haven mode: the yen and Swiss franc strengthened.
- USD/JPY 157.60 (-0.3%) and USD/CHF 0.7998 (-0.4%).
- EUR/USD 1.1621 (+0.2%), GBP/USD 1.3393 (+0.1%) triggered by short covering.
- US markets are closed for MLK Day and the Fed is in a blackout period, making trading more sensitive. (asd)
Source: Newsmaker.id
