The dollar rose to the day’s highs against a currency basket

 

Daily Afternoon Report 19.06.2018

 

The dollar rose to the day’s highs against a currency basket on Tuesday and pared back some losses against the safe haven yen as heightened trade tensions between the U.S. and China soured risk appetite.

China warned Tuesday that it would retaliate swiftly after U.S. President Donald Trump threatened to impose a 10% tariff on $200 billion of Chinese imports.

The moves exacerbated worries among investors that the world’s two largest economies could descend into an all-out trade war.

Uncertainty over the future of the North American Free Trade Agreement and concerns over tariffs that the Trump administration imposed on European trading partners also added to investor nerves.

The dollar pared back some losses against the safe haven yen, with USDJPY last at 109.87, off 0.62% for the day, after falling to a one week low of 109.55 earlier.

The Japanese currency is often sought by investors in times of geopolitical tensions and market turmoil.

The euro was trading at three-week lows against the stronger yen, with EURJPY down 1.34% to 127.12.

The euro dropped against the dollar, with EURUSD falling 0.72% to 1.1538.

The euro remained under pressure after European Central Bank President Mario Draghi reiterated that monetary policy will remain persistent, prudent and patient on Tuesday after the bank’s dovish guidance on interest rates last week.

The pound fell to seven-month lows against the dollar as trade fears and fresh Brexit uncertainty weighed, with GBPUSD down 0.69% to 1.3153.

Meanwhile, the Australian and Canadian dollars plumbed their lowest levels in a year, with AUDUSD down 0.98% to 0.7350, while USDCAD climbed 0.57% to 1.3277.