Dollar Takes a Hit, "Sell America" Returns
The US dollar fell sharply on Tuesday (January 20th), triggered by a combination of geopolitical sentiment and market concerns over the direction of US policy. The White House's tariff threats against several European countries—related to the Greenland issue—pushed investors into a "risk-off" mode and reduced exposure to US assets. Pressure was felt not only in the foreign exchange market but also in US stocks and government bonds, prompting the "sell America" narrative to become a hot topic again.
In the currency market, the dollar's weakness was reflected in the dollar index, which fell to around 98.84. The euro and the pound sterling moved higher, strengthening to around $1.1663 and $1.3435, respectively. These movements indicate some capital flows shifting to other major currencies, as market participants awaited Europe's response and assessed the risk of a further escalation of the trade war.
Meanwhile, in Asia, volatility increased after the Japanese bond market became volatile. The announcement of a snap election on February 8th and Prime Minister Sanae Takaichi's fiscal easing agenda sparked renewed concerns about Japan's fiscal health. The yen tended to weaken, with the dollar hovering around 158.45 yen. Investors believe looser fiscal policy could extend pressure on Japanese bonds, which in turn impacts global sentiment as the bond market serves as an "anchor" for other asset valuations.
Meanwhile, safe-haven flows remained visible. The Swiss franc strengthened, pushing USD/CHF to around 0.7902, reflecting demand for safe havens amid heightened uncertainty. Against the offshore yuan, the dollar remained relatively stable at around 6.9548, in line with market expectations after the People's Bank of China (PBOC) maintained its benchmark lending rate. Commodity currencies also strengthened, with AUD/USD ranging between 0.6732 and 0.6741 and NZD/USD ranging between 0.5833 and 0.5835, following the dollar's weakening and the rapidly shifting risk appetite.
Source: Newsmaker.id
