The dollar plunged further against other currencies in Asia on Monday morning as the greenback was dragged down by global fears of a full-blown trade war between the world’s two largest economies – the U.S. and China. Investors also await the U.S. GDP figures due later in the week.
The U.S. dollar index that tracks the greenback against a basket of six major currencies last stood at 88.98 at 12:09AM ET (04:09 GMT), down 0.12%, hitting a one-month low.
Last week, U.S. President Donald Trump signed a presidential memorandum to import tariffs on up to $60 billion of Chinese imports, citing the move was due to “misappropriation of U.S. intellectual property”.
In China, the People’s Bank of China (PBOC) set the fix rate of yuan against the dollar at 6.3193 versus the previous day’s 6.3272. The USD/CNY pair eased 0.04% to 6.3120.
In response to the U.S. anti-China tariffs, China plans to impose retaliatory tariffs on $3 billion of U.S. imports. The country planned to impose 15% tariffs on steel pipes, fruit, wine and other products from the U.S. It also planned to add 25% tariffs on pork and recycled aluminum. The rising tensions between the two countries are hampering investors’ risk appetitie.
The USD/JPY pair gained 0.20% to 104.95, after falling to a one-month low at 104.67 on Monday morning. The pair dropped to the 104 range on Monday after trading above the 106 level last week. In times of market volatility, risk aversion leads to the appreciation of the anti-risk yen as investors are stocking up on the safe-haven currency.
The deepening of Japan’s political scandal was also cited as catalyst to boost the yen. Japan’s Prime Minister Shinzo Abe has been pushing his “Abenomics” policy to pull the yen down, and his unpopularity stemmed from the scandal weakened the monetary loosening efforts.
The AUD/USD pair traded at 0.7728, up 0.38%. Australia will see its February’s HIA new home sales data and a speech from the Reserve Bank of Australia’s (RBA) Assistant Governor Kent on Tuesday.