Dollar dented as Trump tariff threats drive investors into safe havens
The dollar fell on Monday, as investors piled into safe havens like the Swiss franc, after U.S. President Donald Trump’s latest tariff threats against Europe over Greenland sparked a broad risk-averse move across markets.
Trump said over the weekend he would impose an additional 10% import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, until the U.S. is allowed to buy Greenland.
European leaders were scrambling to avert a trade war and on Sunday agreed to intensify their efforts to dissuade Trump from imposing tariffs, while also preparing retaliatory measures should the duties go ahead.
After dropping briefly in overnight trading, European currencies including the euro, pound and Scandinavian crowns rose. The Swiss franc, a classic safe-haven, headed for its largest daily rise against the dollar in a month.
EURO BENEFITS FROM DOLLAR AVERSION
The euro was up 0.3% at $1.163 around midday in Europe, while the pound was up 0.27% to $1.3415.
Investors dumped the dollar after Trump unveiled sweeping tariffs on the world last April, triggering a crisis of confidence in U.S. assets.
While some movement of capital out of the dollar was evident on Monday, most notably with the Swiss franc’s gains, analysts said a further escalation in tensions could see investors flock back to the U.S. currency.
YEN STILL IN INTERVENTION ZONE
The dollar was down 0.5% on the day at 0.7984 Swiss francs, and a fraction lower against the Japanese yen, another non-U.S. safe-haven, at 158 yen.
Domestic Japanese politics have hampered the yen in recent weeks, with a looming snap election raising expectations of greater fiscal stimulus. With the yen trading around its weakest since mid-2024, the risk of official intervention is high, not least because of the verbal warnings from Tokyo in the last couple of weeks.
Cryptocurrencies, often a barometer of investor risk sentiment, tumbled. Bitcoin was down 2.5% at $93,011, while ether fell 3.5% to $3,223.
Source: Reuters.com
