BY COMFORT OGBONNA
The U.S. dollar weakened sharply on Monday as rattled investors sought safety in traditional haven currencies following President Donald Trump’s latest tariff ultimatum against Europe. The move triggered a wave of caution in financial markets, pushing traders toward the Japanese yen and Swiss franc as uncertainty grew over the political and economic fallout.
Trump announced over the weekend that the United States would introduce an additional 10% tariff from February 1 on goods coming from a wide list of European nations—including Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain unless Washington is allowed to purchase Greenland. Leaders across Europe blasted his proposal, calling the pressure tactic coercive and unacceptable. France led a chorus of criticism, suggesting a slate of severe but untested retaliatory measures if the threat materializes.
Foreign exchange markets reacted immediately as Monday’s Asian session opened. The euro and the British pound were initially dumped by traders, with both currencies tumbling to multi-week lows of $1.1572 and $1.3321. But sentiment flipped as the trading day deepened and markets assessed the broader impact. Instead of Europe being punished, it was the dollar that slipped as uncertainty surrounding U.S. policy surged.
The euro rebounded and rose 0.21% to $1.1623, and the pound recovered 0.11% to $1.3390. Analysts noted a familiar market pattern—when U.S. tariff politics flare, confidence in the greenback tends to erode rather than strengthen.
Khoon Goh, head of Asia research at ANZ, pointed out that last year’s sweeping “Liberation Day” tariffs had sparked a similar result. Instead of damaging rivals, they weakened the dollar. With investors now pricing in additional political risk, the dollar once again bore the weight of international skepticism.
The greenback slipped 0.36% against the Swiss franc to 0.7993 and fell 0.24% against the yen to 157.74. The dollar index also eased and hovered at 99.18.
Digital assets echoed that risk-averse mood. Bitcoin tumbled more than 3% to $92,477.54 and ether sank nearly 4% to $3,203.13 as traders shed exposure to volatile markets.
Economic data from Asia added another layer of developments. China reported fourth-quarter annual growth of 4.5%, slightly exceeding expectations and aligning with official targets. Yet currency movement across the region was subdued. The onshore yuan remained near 6.9647 per dollar while its offshore counterpart ticked slightly stronger to 6.9608.
Commodity-linked currencies also reflected caution. The Australian dollar—often treated as a proxy for China’s economy—slipped 0.09% to $0.6685, pressured by the retreat from risk. By contrast, the New Zealand dollar edged 0.25% higher to $0.5766, breaking slightly from the broader downward trend.
Global markets appear to be settling into yet another cycle where trade tensions originating in Washington weaken the very currency they were intended to strengthen, leaving investors to brace for the next round of geopolitical shockwaves.
Original article
Comments